£1bn to kick-start Silly Week

From The Metro:

Hundreds of building projects that have stalled in the recession are to be kick-started with almost £1 billion of public money, the Government is set to announce.

The cash is being targeted at developers and housing associations who can get developments back under way by the end of the year but cannot get funding from elsewhere.

Some 20,000 jobs are expected to be created in the process. Up to 22,400 new homes, more than a third of which will be "affordable", could be built(1). Almost half of the money will be in the form of loans, to be repaid within five years(2)...

Housing minister John Healey will announce 270 development projects in line for the cash, although they will still have to undergo due diligence. But he will stress that the Government is not awarding developers a "handout"(3).

"There are tough terms to this deal including repayment of loans within five years," he will say. "And only builders who accept a realistic current market price(4) for their homes are eligible..."

(1) If the government allowed more homes to be built, or even better stopped wasting £4 billion a year on Housing Benefit for private tenants and used the money to build 80,000 council houses a year, then houses would become more affordable. Sure, councils aren't brilliant at managing their properties, so why not auction off the right to collect the rent to managing companies (or indeed tenants' associations), and allow them to keep whatever surplus they generate, and repeat the process every three years or so? Then instead of housing being an expense, it would be a nifty source of income, seeing as councils can obtain the most valuable/expensive component - i.e. planning permission - for free.

(2) So if 'almost half' is loans, that means over half is a straight hand out, yes? Why 'within five years'? If sensibly priced, it shouldn't take the builders more than a year to finish off the houses and sell them.

(3) See (2).

(4) Does anybody think that they'll manage to strike a good deal for the taxpayer? Why not wait until the builders go bankrupt and then buy them for fire-sale prices? Why not give the builders a kick up the arse by imposing Business Rates on half-finished developments? If there's only one potential buyer, then whatever he offers is the market price, surely? So maybe this qualifies as "another reckless throw of the dice" to prop up house prices.