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Stamp Duty Changes – More Work Needed

My alarm went off at 4.30am this morning as I ambled bleary eyed to the BBC 5 live studios in Bristol for a crack of dawn comment on the governments latest “fightback” proposals for the housing market.

I was caught a little on the hoof by the detail of the opening question which unfortunately was not really what I prepared. I was annoyed with myself for that. It’s all experience though and I did manage to mention some of the main points I was keen to get across which are as follows.

I think the government has spent a long time looking into the issues that are behind the credit crunch and the near collapse of the mortgage market, in fact you could argue it has procrastinated for too long now.

We have The Crosby report set up to look into this in more detail although even the interim report stated that it may actually suggest that government intervention is not the answer. The fact that house prices are falling is actually the biggest help to first-time buyers.

While the new measures, including the Mortgage Rescue Package, Homebuy Direct Scheme and the increase in social housing funds, are all welcome, I do not believe they really get to the crux of the issue, dealing with a decline in confidence and a lack of liquidity that would allow lenders to provide more mortgages.

Perhaps there are more positive actions that could have been taken, much like we have seen over in the US, with a positive cut in interest rates, a clear and concise policy where Stamp Duty is concerned. At the very least removing this additional burden for first-time buyers would help, and an extension of the Bank of England’s Special Liquidity Scheme.

What followed this morning was the announcement that Stamp Duty would be waived for a year for all residential properties under £175,000. My initial response is unprintable.

The clean version is ‘big deal’. Is that really the sum of many hours of debating. At least scrap it up to the £250,000 level and give people more of a chance. Or, as one of my colleagues suggested, ratchet it like income tax. Something bold and interesting.

Dependent on what indices you believe the average house price is somewhere between £170,000 and £220,000. In London and many other places it is considerably more so this extra £50,000 “give away” is hardly going to have many people dancing in the aisles.

At least they have made a decision finally. While good in parts, unfortunately these proposals do not go far enough to undo the damage the governments own gaffes have done to a market in need of a sharp tonic.


Brokers must rediscover the word ‘no’

Research commissioned by GE Money Home Lending has estimated that over the past 18 months some 3.4 million borrowers have been turned down for a mortgage at least once, with a further 450,000 applying four or more times before their application was accepted.

SWB reports healthy profits

Scottish Widows Bank has reported pre-tax profits of £16.4m – a 12% year-on-year rise. Net mortgage growth for the first half of 2008 was £800m, with total mortgage balances of £6.6bn. SWB says its credit quality is strong, with just 0.23% of its book two or more months in arrears.

Coles’ gamble pays off

The champagne life-style of Adrian Coles, secretary general of the Building Societies Association (pictured), recently got a boost.


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