He says the reform of Stamp Duty is welcome and overdue but it feels the government could have moved to increase the threshold in accordance with the House Price Index, which would have benefited more borrowers.
Cummings says: “The danger of offering such a solution limited to a one year period remains and risks creating an artificial bubble in house prices.
” We would have preferred to see an index linked system and a wider review is desperately needed. We would like to see a root and branch reform of Stamp Duty, which considers its efficacy in today’s market and which draws on international comparators to assess its future role in public finance.
“The current regime looks dated and more modern systems exist in other EU member states, and around the world. We would commend these to the government.”
Cummings thinks the HomeBuy scheme is an innovative proposal that could be of substantial benefit to the house building industry. But, it must be open to a range of firms and the operating terms must be made public.
Cummings says: “We are concerned about how the new free of charge facility will work and look forward to discussing this with the government in more detail.
“Importantly we would also have liked to see this proposal opened up beyond the first time buyer market as the biggest level of transaction within the mortgage industry is the remortgage market.
“This scheme is aimed at supporting 10,000 first-time buyers and the house building industry. For the majority of first-time buyers, new build properties are not the answer. We would therefore like to see the government reconsider its proposals and allow a more liberal approach to the scheme.
“This announcement will clearly cause uncertainty within the industry relating to the regulatory risks involved in advising first-time buyers – and we will be discussing the scheme’s implications with the FSA.”
Cummings feels the waiting period before Income Support for Mortgage Interest is paid, being shortened from 39 to 13 weeks and limits increased to £175,000, is a significant change in government policy and is perhaps the most eye-catching of the reforms proposed.
Cummings says: “Over the last decade, the government has signaled that borrowers must look to their own devices in case of mortgage difficulties, but this change in policy signals a shift in thinking.
“One of the most sweeping reforms put forward by the government today is that which deals with those borrowers who fall into arrears. With £200m pledged by Government for vulnerable families, under a three point plan, the shake-up of existing arrangement should not be under-estimated.
“We look forward to working with government to deliver the shared ownership, shared equity and sale and rent back aspects of the proposals – and will be keen to ensure that these schemes work in co-operation with the market. We would particularly like to see the sale and rent back schemes under statutory regulation given the current status of that market.”