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Budget 2010: Industry pleased by Stamp Duty decision

by: Mortgage Solutions
  • 24/03/2010
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The mortgage industry has broadly welcomed the Chancellor's Budget Stamp Duty announcement.

Stewart Baseley, executive chairman of the House Building Federation, said: “The move will helped beleaguered first-time buyers struggling to save the large deposits currently being demanded by lenders.

“First-time buyers are vital to the housing market and the shortage of those able to get mortgages has reduced the industry’s ability to build the new homes we know this country needs.”

Alison Beech, business relationship director at Spicerhaart, described the increased threshold as fantastic news for those at the lower end of the market.

But, she added: “Mortgage availability for those without a sizeable deposit remains challenging. A significant and sustained recovery will only be realised when the market is able to be more competitive and to increase loan to values.

“Improving mortgage availability and affordability will give further support to homebuyers and allow the market to get back on track.”

However, others in the industry were critical of the announcement on Stamp Duty.

Paul Hunt, managing director of technology provider Phoebus Software, said the change was a double-edged sword.

He added: “First-time buyers will be more encouraged to climb onto the property ladder, and it is these buyers that give the market buoyancy and help growth. It will also have a positive impact on the lending market.

“However, he warned that at the top of the market, buyers will be trying to force prices below £1m to avoid the extra £10,000 on a £1m property.

“This could well lead to another stall in the recovery if buyers maintain downward pressure on prices.”

Mark Blackwell, managing director of technology firm xit2, said that funding was the real issue.

He added: “Scrapping Stamp Duty for first-time buyers on purchases up to £250,000 and a 5% rate on properties over £1m is great for grabbing headlines but it doesn’t address the real problem – funding.

“Yes the move will encourage more buyers into the market, but at the moment there simply isn’t the funding to address this demand. Recapitalisation is one answer to the funding problem.”

Jonathan Moore, director of easyroommate.co.uk, agreed and said: “It does not address the real issue for first-time buyers. First-timers simply can’t borrow enough cash to buy a home, and are having to save for up to five years longer.

“There are other options – options that would cost the Treasury less in lost revenue. For instance, if the state-backed banks were forced to provide products that take lodger income into account, the average first-time buyer could access an additional £11,000.”

 

 

 

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