Government guarantees to buy new builds that do not sell

The government has revealed that its £2 billion accelerated construction fund will be used to guarantee housing schemes, including deals to purchase homes that do not sell.

The chairman of the Homes and Communities Agency, Sir Edward Lister, has told industry publication Property Week, that this would be “guarantee money” to help minimise risk for developers.

“So it’s about us going to a housebuilder and instead of expecting the normal build-out rate of 50 units a year, we’ll say ‘we want you to build all 500 in one go and what we’ll do is guarantee to take them off you if you can’t find a buyer’” Lister told the magazine.

PW says this guarantee will be achieved by the HCA directly selling any ‘government purchased homes’ either on the open market, to private rented sector individual or institutional investors, or to registered social landlord housing associations.

It is not known if this policy would apply to ultra-high priced schemes such as those currently struggling to find buyers at the likes of Nine Elms in central London.

As we reported earlier this week, the fund was announced – with few details at the time – by Communities Secretary Sajid Javid at the Conservative conference.

“We will take government-owned land and partner with contractors and investors to speed up housebuilding. We will create new supply chains using offsite construction. And we will encourage new models of building to make houses that people want, more cheaply and at pace” he told delegates in Birmingham.

Lister has also told Property Week that there may be some link between those schemes which will be effectively underwritten by the government, and the adoption of faster building techniques, most likely modular construction.

Lister also stressed that the fund would only back projects that could be built out quickly and that the HCA would consider allowing developers to defer payments for the land in order to speed up the process. “We’re really only interested in speed. It’s about how fast we can get the delivery through” he said.

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Written by: Houseladder