Further Market Intervention Required Say Home Builders

Scotland's home building industry has set out the case for a continued UK-wide economic re-inflation package ahead of the Chancellor’s Pre-Budget Report on 9 December.

Jonathan Fair, Chief Executive of Homes for Scotland, the body representing companies building 95% of new homes built for sale in Scotland as well as an increasingly significant proportion of affordable housing output, said: "Housing is a fundamental human need yet, two years into the economic downturn, the numbers of new homes both being started and completed in Scotland are touching all-time lows, exacerbating the significant housing shortfall which already existed prior to the credit crunch."

In a letter to Alistair Darling, Fair highlighted the serious social implications of failing to provide enough homes and called for more new public investment to be focused on massively accelerating the provision of roads, transportation, schools, health and community facilities, without which development cannot proceed.


He also demanded further financial market intervention aligned to long-term taxation incentives, including:

• extending the current Stamp Duty holiday or abolishing the levy completely for a proscribed period
• continuing the VAT reduction period in order to encourage investment and entrepreneurial spirit back into the economy.
• placing new obligations upon state-owned banks to pro-actively lend to SMEs and the mortgage market
• introducing a government-backed Mortgage Indemnity Guarantee (MIG) scheme to underwrite higher-risk Loan to Valuation mortgages and so ease availability of mortgage finance to key First Time Buyers who are currently priced out of the market by exorbitant deposit requirements.
• working with the FSA to re-balance the capital adequacy requirements that currently place punitive charges upon those institutions who wish to offer mortgages above 80% Loan to Valuation for low-risk customers

Fair concluded: "By acting on the above, the Chancellor has the opportunity to send a powerful message to the individuals and corporate bodies of Scotland during an election year that the UK government remains attune to their needs and is prepared to act in their best interests wherever it has the opportunity to do so."

(GK/KMcA)