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House builders want radical action to boost property market

It wants the Chancellor Alistair Darling to use next week's pre-budget report to assist the property market as it is such a critical barometre and determinant of the wider economy.

Stewart Basely, executive chairman of the Home Builders Federation, said the Government must use the influence it now has in the banking sector to insist some sensible levels of mortgage lending return, as was promised by the Chancellor when the package to inject cash into the banks was announced last month.

He is also suggesting that he could re-allocate a significant part of the Housing Corporation's budget that will not now be spent as planned because of the current downturn, to buy both empty new homes, and to unlock sites on which development could start immediately with an injection of upfront public money and be developed using public private partnership agreements.

The federation believes that other incentives could be put in place that would encourage new sources of housing demand, such as institutional investment in private rented housing, and allowing Self-invested Person Pensions (SIPPs) to invest in residential property.

'We have reached the stage where radical and decisive action is needed to assist the property market. Whilst the moves made by Government so far are welcome, they have in no way been comprehensive enough to address the scale of the current housing crisis,' Basely said.

'With the housing market so absolutely critical to the wider economy, the Chancellor cannot miss the opportunity presented by the Pre-Budget Report. Allied to the long awaited cuts in interest rates, restoring mortgage lending, injecting cash directly into building projects and introducing measures to encourage large new investment in residential property would boost the housing market, the benefits of which I believe would ripple through the economy,' he added.