Speaking at the National House-Building Council annual lunch deputy prime minister Nick Clegg warned that the UK has “been under-building for decades” with more than 100,000 homes needing to be built each year.
He pledged to provide £225m to underwrite major housing projects that had “hit a wall”. The projects will be modelled on “garden cities” of the early 20th century such as Letchworth and Milton Keynes, which were built after the second world war.
The Confederation of Business Industry said the move should “inject confidence” into the sector by offering some respite to housebuilders struggling to get funding.
But the lobby group added: “House builders need the government to deliver on its promises by urgently clarifying how this new funding will work alongside the £10bn of government guarantees, and by championing NewBuy to boost demand.”
Clegg also announced that the European Investment Bank will be injecting £400m into the UK affordable housing sector.
That money will be allocated by next March and will help deliver new energy efficient affordable homes – as well as improving the energy efficiency of existing homes too, he said.