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A missed chance to aid stability

Despite recent optimism about the eurozone and government enticements for new-build buyers, it is still difficult to be hopeful about the prospects for mortgage growth in the next few years

Even though the 2012 Budget was preceded by more leaks than a bucket made of cheese graters, chancellor George Osborne’s speech still included some surprises.

While the Budget created headlines for his uncompromising stance on Stamp Duty on high value homes, the proposals outlined by Osborne do little to build on the positive steps taken by lenders over the last 12 months.

What will count most for the property market in the next year was what was left unsaid. Despite the excitement of the media over what was clearly a delicate compromise between the coalition partners, the 7% Stamp Duty raid will have only a modest impact on the property market.

According to, only 2,834 properties worth over £2m have been sold in the last two years. But the Land Registry’s total figures for the same period show more than 1.3 million transactions, which means that the hike will affect just 0.2% of transactions.

This is not to say the move is welcome, since along with the punitive rates for purchases using offshore companies, it will subdue investment in high-value property in London and the South-East, which has seen major growth in the property and mortgage industries. The point is that for most of the market, the headline changes in the Budget will make next to no impact.

Policies aiming at first-time buyers are far more relevant. For all his assumed Robin Hoodesque virtue in hammering buyers of £2m homes, the chancellor’s silence on the Stamp Duty holiday for first-time buyers demonstrates this was not a Budget focussed on supporting the property and mortgage industries.

The NewBuy Guarantee, launched on March 12, received only a passing mention. This was a tacit admission that in unchanged market conditions, though the scheme could help get more buyers to market, the return of Stamp Duty on properties over £125,000 will probably cancel out the benefit entirely.

It may be that Osborne has taken heart from the show of commitment over the last year by the lending industry to maintaining property prices and ensuring economic headwinds don’t restrict the availability of finance.


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The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.


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