Britain's Chancellor of the Exchequer George Osborne (L) talks with the CEO of the London Organising Committee of the Olympic and Paralympic Games (LOCOG) Paul Deighton during a visit to the Maracana Stadium in Rio de Janeiro, April 7, 2014. REUTERS/Ricar
Britain's Chancellor of the Exchequer George Osborne (L) talks with the CEO of the London Organising Committee of the Olympic and Paralympic Games (LOCOG) Paul Deighton during a visit to the Maracana Stadium in Rio de Janeiro, April 7, 2014. REUTERS/Ricardo Moraes REUTERS/Ricardo Moraes

The British government has announced a drastic cut in the U.K. stamp duty pertaining to property transactions effective from Dec 4 and addressed the long-standing grievance of home buyers. it is considered a politically savvy decision, coming some 150 days ahead of the general election.

Announcing the cut, Finance Minister George Osborne, in his half-yearly update on the country's finances, said the stamp duty tax would be lowered for a majority of home buyers even though those buying premium property will have to cough up more, reported Reuters. Besides this, the housing sector got more good news with the U.K. government announcing its intent to build thousands of new homes for the first time after the 1970s to ease the pressure of national housing shortage.

Cambridgeshire Township

Under the new plan, the government will build a new township containing 10,000 properties at a derelict RAF base in Cambridgeshire, which is one of the fastest growing counties. Announcing the government's decision, Danny Alexander, the chief secretary to the Treasury, said the private companies had failed in meeting the demand of 300,000 new homes. That is why the government is stepping in.

This initiative is part of the National Infrastructure Plan, which also includes road projects worth £15 billion, flood defences of £2.3 billion and allocation for energy programmes. The government will also build a new garden city at Bicester, Oxfordshire, containing 13,000 homes. It will be funded by a mixture of public spending and loans.

Alexander said the message to the private sector is simple: "if you don't build, we will." Already a pilot project has been launched to the north of Cambridge, at the site of the former RAF base at Northstowe to create the largest planned town since Milton Keynes was built in Buckinghamshire.

The responsibility for creating the township will be with Homes and Communities Agency, which will also lead the scheme and decide the mix of properties and commission the builders and infrastructure providers, including roads and water supplies. The plan is to sell the houses to the private sector.

Alexander said the government had been releasing sites for around 100,000 houses ever since 2010, but now it wanted to take a "much more ambitious approach," reported The Independent. Grainia Long, chief executive of the Chartered Institute of Housing, welcomed the move and said, "We've been failing to build the number of new homes for decades. The result is a housing crisis in which millions of people are being priced out of a decent home." Brian Berry, chief executive of the Federation of Master Builders, said the scale of the housing crisis in the U.K makes it encouraging to see housing being considered alongside long term infrastructure planning.