The move comes amid growing evidence that a new bottleneck has emerged in the housing market with people looking to buy their second homes trapped in negative equity or struggling to raise a big enough deposit.
The Department for Communities and Local Government (DCLG) is working on a package expected to be unveiled before the budget that will offer help to second steppers by extending the NewBuy scheme, under which the government and private sector have helped underwrite mortgages principally for first-time buyers of new-build homes, to existing homeowners with limited or negative equity.
The average age for a second purchase is now 41, restricting the supply of starter properties. In some areas approximately 30% of homeowners are in negative equity, preventing them from moving on and constraining the supply of first-time buyer homes. Raising a deposit was the biggest barrier – the average deposit required for a second stepper in 2012 was £58,836, almost double the deposit required in 2002 of £31,189.
Ministers are also looking to see how they can energise the stalled £10bn housing infrastructure guarantee scheme to more tenures. It is currently confined to affordable houses and the private rented sector, and has taken far longer than expected to reach the launch stage. Fresh measures to release small plots of public land for building are also expected.
The plans to kickstart housebuilding come amid growing fears that a slump in activity across the manufacturing and construction sectors is about to send the economy into a triple-dip recession.
According to official data published, manufacturing output fell 1.5% in January on the previous month and was 3% lower than January 2012. The news sent the pound sliding by almost a cent against the dollar to a new two and a half year low of 1.484. Currency markets have bet against the UK since the turn of the year. Since January, strong sales of sterling have triggered a 7% decline.
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