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Breakingviews - Capital Calls: UK housebuilders get another boost

Builders construct a modular Space4 home on a Persimmon development in Coventry, February 22, 2017.

LONDON (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.

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RAISE THE ROOF. Rishi Sunak is handing UK housebuilders another potential bonus. The UK finance minister will announce a new mortgage guarantee scheme when he unveils his budget on Wednesday, the Treasury said over the weekend. The plan will encourage banks to lend to buyers with just a 5% deposit for a property worth up to 600,000 pounds. Investors are betting that Persimmon, Barratt Developments and Taylor Wimpey will be among the winners. Shares in the UK housebuilders rose between 6% and 7% on Monday morning.

The scheme, which should lure banks back into riskier mortgage lending amid the pandemic, is the latest official effort to prop up the housing market. The UK previously offered “Help to Buy” loans for first-time buyers, and more recently introduced a holiday on property transaction taxes. It should also help housebuilders. In 2017 Persimmon paid a $100 million bonus to its then-CEO after the company’s share price soared as a result of “Help to Buy”. Bonuses for construction executives look as safe as houses. (By Aimee Donnellan)

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