Now House Construction Firms Need Government Assistance

Posted on January 2, 2009
Filed Under Real Estate |

The UK economy continues to slow down, and a href=http://www.ukpb.co.uk target=’_blank’House Sales UK/a continue to get more and more difficult, and house values are continuing to fall. Even though house values are falling more slowly now than they were falling earlier this year, theyrsquo;re still causing grave concerns for house Building Companies, and indeed for Commercial Property Developers as well.brbrDue to this, the House Builders Association, the largest trade body representing the UK industry, has advised the government that considerable additional funds are required in order to avoid a potential meltdown in large parts of the industry. They show that such a tragedy would have potentially catastrophic and long term effects on the house Sales UK market, and this would as a result spread into and significantly damage the wider economybrbrThe House Builders Association, known as HBA wrote to the Chancellor of the Exchequer, stating that the present crisis had come about due to a severe shortage in the availability of mortgages. The HBA, which is a division of the National Federation of Builders, went on to claim that this dearth of mortgage funds was dragging the total UK economy into downturn.brbrThe HBA also show that the Council of Mortgage Lenders has already estimated that net lending during the present year will be about forty billion pounds, down from pound;108 billion last year. That is a decrease of a staggering 63%. The Council of Mortgage Lenders forecast an additional decrease in net lending next year. brbrThe HBA welcome and approve of the governmentrsquo;s recent recapitalisation of the High Street Banks, with its objective of restoring lending to a level suitable for maintaining economic activity at a level which will minimise the present inevitable downturn. Although they argue that this will not be successful unless the Chancellor can find a way to offer some guaranteed mortgage lending.brbrThe HBA thinks that such a scheme could be applied|put into practice|implementedminimal risk to public purse, because, they argue that all new lending in the predictable future will only be agreed if the borrower fulfils a much stricter series of requirements than has been the case recently. Itrsquo;s predicted that, from now on a href=http://www.ukpb.co.uk/introduction.htm target=’_blank’Home Buyers/a will have to put down a sizeable deposit, and this will perform 2 essential functions; first of all it will demonstrate that the Home Buyer is able to manage their money well enough to gather together a deposit, and secondly it will supply a buffer against negative equity in case house values decrease further, or if the a href=http://www.ukpb.co.uk/introduction.htm target=’_blank’Home Buyer/a is unfortunate enough to lose his job, and need to roll over the interest for up to 2 years.br

Tags: Real Estate

Now House Construction Firms Need Government Assistance

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