Britain is set to consider a plan to free up 1 billion pounds ($2 billion) of public money to buy new homes as it looks to stem a plunge in sales which has thrown the country's house building industry into crisis. The plan is the latest proposal to be submitted to the UK government, which has publicly asked for suggestions to deal with the worsening housing market problems. The government is under pressure to help the ailing sector, as its troubles threaten tens of thousands of jobs, and targets to build new homes are set to be missed. The National Housing Federation (NHF), an umbrella body of housing associations which run affordable housing for the less well off, said it had submitted a proposal this week to redirect 1 billion pounds of already-committed government money for social housing into buying tens of thousands of new homes from beleaguered builders. NHF Chief Executive David Orr is due to discuss the proposal with housing minister Caroline Flint early next week. In the latest spending round, the government earmarked 8.4 billion pounds for housing associations by April 2011. The NHF fears that many of the 45,000 flats and houses earmarked for social housing this year will not get built, as most of the big house builders have all but stopped building homes due to the sudden collapse of the market since Spring. So the expected 1 billion pounds in unused funds could be spent in innovative ways to buy unsold stock, incomplete developments and land at a discount, according to the body. “A weakening housing market will increase the number of unsold or difficult to sell properties, and sites available for purchase at prices lower than in recent years,” Orr said. “This will create opportunities for housing associations and the affordable housing programme to continue to provide and possibly increase the supply of affordable homes.” The mortgage drought, combined with economic uncertainty and falling prices, has prompted new private home sales to drop by around 60 percent on the same time last year and housing starts to fall to the lowest level since 1945. Forecasts by the Construction Products Association (CPA) predict that less than 147,700 houses will be built by the end of this year, compared with 203,900 in 2007, which makes it increasingly unlikely the government will meet its target for 240,000 new houses a year in England by 2016. The Home Builders Federation (HBF) has called for a raft of measures to help the sector, including a stamp duty holiday and interest rate cuts. To date, however, the government has only announced the launch of a 200 million pound fund to buy unsold homes, and interest rate cuts are highly unlikely given inflation fears.
