Azara Blog: Lib Dems want to bail out property developers

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Date published: 2008/08/27

The BBC says:

A mortgage rescue scheme, and local authorities being allowed to buy unused land are featured in a Liberal Democrat plan to revive the UK housing market.

Treasury spokesman Vince Cable said that changes were needed to stop the "downward spiral" of the market.

Among the proposals are plans for councils to buy empty properties and developers' land-banks to increase the amount of social housing.

The Council of Mortgage lenders said any plan needs to be properly targeted.

The housing market has seen annual price falls of more than 8%, a squeeze on the number of mortgages, especially for first-time buyers, and a slowdown in the number of homes being built.
Mr Cable said that the Liberal Democrat plan would assist the struggling housebuilders who were looking for cash to stabilise their positions.

He said councils could buy unused land owned by developers at a discount rate for use as social housing.
[The CML] said that if councils became more hands-on, even going as far as operating as mortgage lenders themselves, then they should be fully regulated in the same way as lenders in the private sector.

Any time goverment intervenes in the markets you can pretty much guarantee they will make the situation worse, not better. The main reason there is a "downward spiral" in the housing market is because of the credit crunch, and the main reason for that is because the country has just been through a house price bubble fueled by irresponsible lending. The Lib Dem proposals bear little relationship to the actual cause or the actual problem. And on the whole the recent price fall is a good thing, because house prices were way, way too high. If some developers get in trouble for a year or two that is not reason enough to have the government bail them out.

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