Reaction: Govt's housing package
Tuesday, 02 Sep 2008 11:40
Mixed reaction to the government's housing package from the industry
A package of measures designed to alleviate pressure on the UK housing market has been branded "too little too late" by industry sources.
Reacting to announcements earlier this morning by communities and local government secretary Hazel Blears, Ray Boulger, of mortgage advisor John Charcol, said: "The housing market has spluttered through the last few months with indecision on whether there would be a redefining of stamp duty clearly costing the wider economy.
"A suspension for one year on stamp duty for properties up to £175,000 is absolutely not the answer to the problem.
"Yes, it will help a small minority of people, but the issue lies more with mortgage lenders and their 'shut up shop' attitude to lending above certain loan-to-values."
Charcol argues stamp duty should be suspended entirely – at a cost to the exchequer of £2 billion – a figures the advisor believed reasonable to a "level playing field" in the property market.
Figures released yesterday by the Bank of England illustrate the problems facing the market, revealing there were 33,000 mortgage approvals for home loans in July this year, compared to 115,000 during the same month last year.
The Liberal Democrats have been equally critical of the proposals – accusing Labour of political posturing rather than providing genuine assistance.
"Gordon Brown has produced a plan to save his job, not help people struggling with the credit crunch," said Lib Dem leader Nick Clegg.
"If the prime minister really wants to help people on low and middle incomes he could take the simple and obvious step of cutting their taxes, releasing billions of pounds to boost the economy."
The change to the stamp duty thresholds will be in place for one year, before being reassessed. Assistance will also be offered to those most at risk of repossession, along with new funds to allow first-time buyers to enter into shared equity schemes.
A spokeswoman for Halifax – the UK's largest mortgage lender - said: "We welcome the Government's stamp duty initiative. This is a sensible measure and it will help the housing market."
However, the Council of Mortgage Lenders (CML) remains to be convinced.
"While any initiative to try to help the housing market is welcome, this particular move doesn't go far enough in terms of the starting threshold and it is also getting close to the £250,000 threshold.
"The level of transactions this year is lower than last year and, while it means that around 40 per cent of transactions won't be caught (by stamp duty), it is questionable whether it will incentivise buyers who wouldn't have entered the market anyway."
The Conservative party is also taking a pragmatic approach, promising to offer assistance where possible, but calling for further action.
Shadow chancellor George Osborne said: "We will look at the details of these measures and we will support those that will work.
"But let's be clear, they are not going to help the vast majority of families facing a rising cost of living and falling house prices. Nor do they amount to the first instalment of the economic recovery plan we were promised.
"I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs."
However, the prime minister remains robust in defence of the proposals, arguing: "These are the things that a government should do as we come through what is a difficult situation, to show that the economy is resilient.
"We will come through these problems."
Chris O'Toole