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Labour: Newbuy was ‘ludicrously overhyped’

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Labour has criticised the Government’s NewBuy scheme for being “ludicrously overhyped”, saying it will take 200 years to meet the target of 100,000 new homes.

Speaking at a fringe event on housing policy at the Labour autumn conference in Manchester today, shadow housing minister Jack Dromey said the Government has achieved little, despite a “litany of announcements”.

Under the scheme, announced in the Government’s housing strategy last November and launched in March, lenders will offer 95 per cent LTV mortgages for new-build properties against a mortgage indemnity guarantee funded jointly by house builders and the Government.

Last month, figures showed 1,300 people had used NewBuy in the first six months, with just 250 new homes built, despite Government targets of 100,000 by 2015.

Dromey said: “NewBuy was ludicrously overhyped, when the Government said there would be 100,000 homes built and the first figures show it is actually 250. At this rate it will be a success, but the only problem is that it will take 200 years.”

Federation of Master Builders chief executive Brian Berry said the Government has to go further than NewBuy.

He said: “We have to go further as current schemes simply have not worked as hoped. One reason is the NewBuy interest rates are 5 per cent when on the open market it is 3.79 per cent. The interest rates just are not stacking up so it is little wonder it is not taking off.”

Dromey said the Government has made some positive moves, highlighting FirstBuy as a “reasonable success” and also praised plans to back the balance sheets of those building homes at affordable rents as having “significant potential”.

He also promised a “big offer” from Labour on housing policy at the next election, pledging it will take “centre stage” in a way it has not done for 25 years.

Yesterday, shadow chancellor Ed Balls unveiled proposals to use a windfall from selling 4G mobile phone licences to pay for stamp duty relief for first-time buyers up to £250,000 and to build 100,000 affordable homes.

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