The government has today announced a £3billion housebuilders fund to support developers, SMEs and custom builders. Sajid Javid, the communities secretary, has set target of building one million new homes by the year 2020.

It is well documented that the UK has a housing shortage and Choices Investments are pleased to see the government pledging £3billion to help this. Fundamentally, the under supply of housing is forcing the price of properties up faster than is sustainable. With this comes the obvious difficulty for first time buyers to get onto the property ladder. With the government stopping help to buy at the end of the year, this difficulty is still going to exist but we would expect the level of house price growth to slow.

The new fund is expected to help with the building of 225,000 new homes and will obviously create thousands of jobs in the related industries. Large developers are well known to buy land and sit on it until such point that they want to build the properties and we would hope that the added funding available would force them to build on these site rather than leaving them as wasteland for longer than is needed.

There has also been the news that the planning process is to be sped up, avoiding the delay of having barren land when housing is needed. This should, according to Sajid Javid, help start 15,000 new homes by 2021.

The government are looking to work alongside developers in order to build on brownfield and abandoned sites. By introducing new supply chains, it is hoped that they will be able to deliver new houses that people want to buy more cheaply and at a faster rate than ever before.

For the investor, this news is positive. With added developments, local areas will also be developed. Everyone knows of an old industrial site that is no longer being used. If these were all new houses, the overall value of the area will increase as well. New homes also attract good tenants and rental values will no doubt increase as well.

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