By Brenda Goh
LONDON, March 17 (Reuters) - Shares in Britain's fivelargest housebuilders jumped on Monday, gaining over 930 millionpounds ($1.55 billion) in value, after the governmentunexpectedly said it would extend a popular mortgage schemeaimed at boosting construction of new homes.
Some industry executives said they were concerned thatleaving the "Help to Buy" scheme in place until the end of thedecade could create an unhealthy dependency on government aid.
Finance minister George Osborne said on Sunday thegovernment would extend a programme of providing equity loans tobuyers of newly built homes costing up to 600,000 pounds by fouryears until 2020.
Coming in the run-up to the government's annual budget onWednesday, the announcement illustrates how the debate over Britain's housing shortage has crept to the top of the politicalagenda, with elections just over a year away.
James Pargeter, head of residential at Deloitte Real Estate,said he was surprised by the length of the extension, sayingmany in the industry had thought that it might be halted earlyor tapered off.
"I guess things get a bit skewed when there's an election,"he said.
Housebuilding stocks rose strongly on Monday, led byPersimmon and Barratt Developments whose sharesclimbed 7 percent and 5.4 percent respectively, adding to gainsof 40 percent over the past year for the sector.
Shares in the two together with Taylor Wimpey,Berkeley Group Holdings and Bellway added about930 million pounds in value on Monday, based on Reuters'calculations.
Stewart Baseley, executive chairman of the Home BuildersFederation, called on Britain's opposition Labour party to giveits backing to the scheme ahead of the May 2015 elections.
"We hope that other parties will be able to ensure that apolitical consensus to continue the scheme is in place beforethe election."
The opposition Labour party, which has pledged to get200,000 homes built a year by 2020, said Britain wasexperiencing the lowest levels of house building in peace timesince the 1920s and that an alternative, "Help to Build" policywas needed.
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The government launched the two-part Help to Buy scheme inApril last year in a bid to free up the mortgage market and spurhousebuilding, a move that it hoped would help ease Britain'sacute housing shortage.
Economists say Britain needs 250,000 new homes per year tokeep pace with population growth. Developers built 108,000 homesin 2013, data from property consultancy Savills showed.
Apart from boosting sales rates and profits at housebuildersBarratt and Taylor Wimpey, the scheme has been creditedfor spurring construction. Construction started on more newhomes in England last year than at any point since 2007, datashowed last month.
The industry has previously called for more clarity on howthe scheme would end.
Knight Frank research analyst Grainne Gilmore said theextension would give more confidence to firms considering bigprojects, typically each involving 500-1,000 units.
"They take ages to get from field to planning to thenbuilding the schemes out. Having that longer time period will bewelcomed by the housebuilders," she said.
Almost 15,000 equity loans have been handed out to aspiringhouse buyers across England since April, Knight Frank datashowed. The scheme accounted for 1.8 percent of totaltransactions across England from April to the end of January.
Osborne did not announce any changes to the second, morecontroversial mortgage guarantee part of the scheme.
Some industry observers are worried about the implicationsof long-term state help.
Pete Redfern, chief executive of housebuilder Taylor Wimpey,had previously called for a clear exit plan for Help to Buy,saying that no industry should depend on such support measures.
Roger Humber, strategic policy adviser to lobby group HouseBuilders Association, said he was increasingly worried aboutdependency on Help to Buy. "They may be perfectly happy now butwill they be happy if you get a change of government, a muchmore interventionist government?"
"An industry cannot prosper if it's built on governmentguarantees," he said.