The government says that to pay for the initiative Stamp Duty on properties over £1m will be set at 5%. The CML estimates this covers around 10,000 properties which could equate to around £250m in additional revenue.
The trade body’s caution is justified as it reveals some 92% of first-time buyers would have benefited from the move had the decision been made in 2009.
Angela Knight, chief executive of the British Bankers’ Association, says the banking sector approves of the move. “The high street banks currently provide more than two-thirds of all home loans,” she says. “They stand ready to support all buyers including first-time buyers who might benefit from the Stamp Duty exemption for lower cost homes.”
Like the CML, the building societies trade body the Building Societies Association has welcomed the move, but not without adding a note of warning.
“The announcement that first-time buyers will not have to pay Stamp Duty on house purchases up to £250,000 is welcome and will provide assistance to those struggling to get on the housing ladder,” it says.
“But this move alone will not lead to anything like a housing market recovery and it also fails to address the fundamental flaws of Stamp Duty. The current system results in the bunching of trans- actions at prices just below thresholds.
“Stamp Duty needs serious reform and we urge the government to research how the system could be reformed to reduce price distortions,” it adds.
Darling also announced that the government plans to speed up the entry procedures for new banks to increase com- petition in the market.
Darling says new entrants to the market – as well as well-known brands – are expected to stimulate competition in products and services. The Office of Fair Trading is to review barriers to entry in retail banking.
The main problem Labour faces is the Obama effect – across the pond the public was so jaded that the desire for change saw Barrack Obama enter the White House pretty much regardless of his policies
Darling also says the government will move secured loans to under the Financial Services Authority’s remit. While he has not given a timeframe as to when this will happen, this is the first time such a move has been confirmed.
The idea was suggested in the recent Mortgage Market Review but is not set in stone.
Other commitments include the decision to freeze the Inheritance Tax threshold at £325,000 for four years, the fact that the Royal Bank of Scotland and Lloyds Banking Group will be committed to providing a total of £94bn of new business loans and a further £11bn to households, and the news that public sector debt is set to hit 54% of gross domestic product this year, 75% in 2014/15 and then fall back.
All in all it was a Budget focussed on the election rather than tackling problems in the economy.
But the main problem Labour faces in this year’s election is what could be called the Obama effect. Across the pond the public was so jaded with the existing administration that the desire for change carried Barrack Obama to the White House regardless of his policies.
After three of the worst years in economic history and with issues such as Iraq still at the forefront of public consciousness voters here may also be craving change. This will play into the Tories’ hands, but could Labour’s plans be enough to convince people that change is possible without a change of administraLStion? Not long to wait to find out.