Fears that cash for North may go elsewhere

Sep 3 2008 by William Green, The Journal

THE North East could lose regeneration cash to fund a multi-billion- pound programme to stabilise the housing market in the rest of the country and boost Labour’s electoral fortunes, it was yesterday claimed.

Newcastle housing boss Bill Shepherd expressed fears that funding for housing regeneration schemes could be lost after Gordon Brown unveiled a multi-billion-pound package to boost the ailing property market.

And the Liberal Democrat city councillor, who is responsible for housing in Newcastle, claimed the Government scheme could be for Labour’s electoral benefit in other parts of the country – although a Government insider strongly denied the claim.

The allegation came after Communities Secretary Hazel Blears unveiled a £1bn housing package to help first-time buyers struggling to get on to the housing ladder, support for vulnerable homeowners facing repossession and assistance for the house-building industry.

Chancellor Alistair Darling unveiled a 12-month stamp duty exemption for residential properties under £175,000 to kickstart the housing market – although Downing Street said the Treasury would not identify how the £600m cost will be funded until this autumn’s Pre-Budget Report.

Changes will be made to the benefits system, so people who have lost their income are able to claim support to pay their mortgage after 13 weeks rather than the current 39-week wait that most face. The £100m scheme will come into force next April.

Bill Shepherd, Newcastle Council’s executive member for housing and regeneration, said: “They were never planning to have this intervention and they have come to the party late and taken the money from somewhere else.”

He said a significant amount of Central Government cash was needed to support major regeneration projects across the city.

“Where is the money coming from? The danger is that it is coming from the most vulnerable projects and the most vulnerable people in the North East of England just to prop up the South East,” said the Lib Dem.

He also blasted the stamp-duty changes as a one-year gimmick as estate agents expressed disappointment that ministers had not gone further in reducing the tax threshold on more expensive properties.

Mr Shepherd also claimed ministers were catching up with the Lib Dems and with Newcastle Council, which has already proposed buying part-shares in properties to keep people in their homes and buy up unsold new developments.

But an insider at the Department for Communities and Local Government said budgets for housing market renewal pathfinders such as in Newcastle were unaffected with money brought forward from a long-term £8bn pot for affordable housing. There was no systematic transfer of resources from North to South, added the source.

North East Minister Nick Brown said the proposals were welcome in the region and could be particularly beneficial because of its housing market.

Package of measures

THE package of measures includes:

A 12-month exemption on stamp duty for homes under £175,000 in a £600m move to help 500,000 home buyers.

A £200m mortgage rescue scheme to help 6,000 families unable to pay mortgages facing repossession and homelessness.

The £300m HomeBuy Direct shared-equity scheme is designed to help up to 10,000 first-time buyers buy a new-build property. Those with a household income of less than £60,000 could be offered a free loan for five years for up to 30% of a property’s value funded by the Government and developers.

The Government is bringing forward £400m for social housing from existing budgets to build 5,500 more homes over 18 months.

The Government will step in and help people who have lost their income pay their mortgage after 13 weeks, rather than the current 39 weeks. It is increasing the mortgage size on which interest payments will be covered from £100,000 to £175,000. It is investing £100m to stop 10,000 people having homes repossessed over two years.

Regional development agencies and ministers will work to support critical regeneration schemes amid the stalling market, looking at how interventions could ensure benefits are delivered.