After all, it will only affect an insignificant number of property transactions and the only positive is that consumers who held off buying until the government stopped dithering about the issue finally know where they stand.
Sadly, many consumers who delayed exchanging on property deals until the Stamp Duty issue was clarified have not returned to the market.
Perhaps they gave up in desperation and decided to sit tight given the doom and gloom surrounding the economy. The spectre of recession may force house prices to fall even further.
Buyers will be keen to buy below the Stamp Duty threshold and this will force sellers who have priced their properties above £175,000 but within touching distance of it to reduce their asking prices.
What we need is a shot in the arm for the securitisation market. The government initiatives launched in recent months are futile attempts to cover the cracks created by the demise of securitisation.
I know this is easier said than done but no-one ever said that being in government was easy and it must rise to the challenge. It’s not to blame for the collapse of securitisation but it has a vital part to play in its recovery.
Sir James Crosby’s (pictured) interim report into mortgage finance states that the recovery of the market can only be achieved by repairing securitisation.
Although it was widely hoped that Sir James would recommend the government take action to kick-start the sector, the interim report suggests that the funding of new mortgages should be left to the market. By recommending no action, the report accepts that problems will continue, possibly until the end of 2010.
One option outlined in the report is that the government could guarantee high quality mortgage debt, transferring the risks from investors.
“This would support increased market activity in the near term, although the extent of the impact on net new mortgage lending is less clear,” says Sir James.
But the proposal is likely to cause controversy because it could put taxpayers’ money at risk. Sir James will now evaluate the options available to the government and is expected to publish his conclusions before the pre-Budget report this autumn. Let’s hope the government decides to take decisive action to tackle securitisation and doesn’t procrastinate like it did over Stamp Duty.