In a speech to the CBI North-East Annual Dinner last night, John Cridland, director-general of the CBI, called on the government to boost activity in the housing market and construction sector, claiming this could be a ‘game-changer’ for economic growth.
Cridland says that since the recession, the high cost of property, strict lending criteria and high deposit requirements have put home ownership out of reach for all but a few, and this dearth of first-time buyers is causing the housing market to stagnate and the economy to suffer.
He says the government should consider introducing a new Mortgage Indemnity Guarantee scheme, more shared ownership schemes and ways of allowing borrowers to access savings in their pension pots in order to make it easier for people to get on the housing ladder.
Cridland says: “Now is the time to stop the stagnation and get the housing market flowing again. The CBI wants to see a revitalised MIG, to reduce the risk of higher LTV mortgages.
“One way this could be done would be through a deal between mortgage providers and house builders. There could also be a role for government to step in with some very focused support to bridge the gap.
“Another way of helping first-time buyers to access finance to get on the property ladder could be to allow them to access locked savings in their personal pension pots through a loan-back scheme. Members of company schemes could borrow money from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life.”
He adds that shared ownership is also worth further consideration, as it was successful during the Thatcher years and a new model of this idea could really make a difference to the housing market.
Cridland says: “I want to see the chancellor use his autumn statement on November 29 to jump-start the housing market. A determined attack on the major blockers of finance and planning could transform the outlook of a generation of young people and provide a huge fillip to consumer and business confidence.”