Countrywide has also called on the government to offer tax relief for first-time buyers, give landlords tax breaks and offer incentives for development projects.
Grenville Turner, group chief executive of Countrywide, said: “Mortgage affordability is the major factor holding back the first-time buyer market.
“Just as the FSA has the power to enforce SME lending targets for all lenders, not just state-backed lenders, why can’t they set mortgage lending targets for all lenders?”
Grenville added that some of the critical factors hindering the UK housing market are mortgage accessibility, availability of quality housing stock and lack of investment in the buy-to-let sector to meet the needs of the growing private rental sector.
“Whilst the government has introduced some measures to increase activity in the housing market, they must have a clear strategy to achieve a balance of demand and supply through tax relief and incentives with the aim being to reduce volatility in the house market.
“For first-time buyers, the government should offer mortgage interest relief at source for mortgages up to the average house price of £169,707.”
Grenville added that with an average of five tenants competing for each available rental property, investment in the buy-to-let sector is also essential.
“The government should introduce additional tax breaks for multiple tenancy units. For example, if a landlord buys a property and instructs a Local Authority or Housing Association, or an approved agent representing them, they should get Stamp duty and/or tax relief on the interest accrued for any loans taken out to finance the purchase.”
Countrywide said that buy-to-let investors “should be treated as businesses” in order to take advantage of capital gains tax relief that is currently available to small businesses.
Lastly, it said that one incentive for development projects would be to introduce a cap on the level of affordable housing.
“Setting an upper limit of 25% for affordable housing per development again will redress the balance, help developer viability and produce more marketable schemes.
“Suspending or postponing Community Infrastructure Levy payments, delaying proposed rises in planning application fees or introducing a tax allowance for these costs would allow developers a tax relief, similar to a ‘capital allowance’.
“This would allow developers, builders and landowners to take development projects forward while significantly incentivising the market and helping with land values, if only implemented as a ‘payment holiday’ during these fragile economic times.”
