Cheap loans to encourage developers to get building homes after Brexit vote

DEPUTY POLITICAL EDITOR THE Conservatives are poised to announce a £3 billion house-building fund to offer developers cheap loans and funding in an effort to “get Britain building” after the EU referendum.

Philip Hammond, the Chancellor, is expected to use his Autumn Statement to unveil a fund targeted at small and medium-sized developers.

It will offer cheap loans or financial guarantees, with the Government taking more financial risk than ever before to try to get more homes built.

Campaigners fear the Government is falling significantly short of its target of building a million new homes by 2020.

A Whitehall source said the fund will be designed to cut the red tape that led to the failure of previous schemes.

Mr Hammond has said he would use his Autumn Statement to announce a “fiscal reset” following the vote to leave the EU.

Economists have suggested it could include borrowing to invest in infrastructure and tax cuts to stimulate the economy.

In her first speech after becoming Prime Minister, Theresa May highlighted the plight of young people struggling to get on the housing ladder. New analysis by Capital Economics, commissioned by housing charity Shelter, found the Government will miss its one million target by 266,000 homes.

The analysis forecast that uncertainty after the EU referendum will lead to an 8 per cent fall in the number of homes built over the next year.

Shelter said that if the current trajectory continues, the Government will still not be building as many homes as before the 2008 crash.

The fund is expected to merge several existing schemes, including the £525 million builders fund and the £1 billion large sites infrastructure programme. Government sources said it will also include new funding to encourage home building.

Developers have been accused of restricting the supply of new houses to keep prices high after figures suggested that planning permission has been granted for 750,000 homes that have not been built.

A report by Civitas, a respected Right- of-centre think tank, found that more than two million planning permits were issued between 2006 and 2015 – which would be enough to build an average of 204,000 homes a year.

However, foundations have been laid on only 1.26 million, suggesting that developers and landowners are sitting on the permissions.

In a significant shift away from the policies of the last Government, Mrs May has said she will ensure housing is not built on protected countryside “except in very special circumstances”.

The change in direction will be welcomed by countryside campaigners who feared that George Osborne was preparing to tear up rules protecting the countryside. Sajid Javid, the Communities Secretary, said: “The Green Belt is absolutely sacrosanct.”