The GOvernment hopes to revive Britain's housing market with a series of initiatives to support homeowners, buyers and builders – but experts warned the measures were not enough on their own to generate a recovery.
Chancellor Alistair Darling yesterday increased the £1bn spending plan announced in September. His announcement raised hopes in the industry – which was already buoyed by news that house sales were up 40 per cent in March month-on-month, and that mortgage lending had also risen.
Gillian Charlesworth, director of external affairs at the Royal Institute of Chartered Surveyors, said: "The Chancellor has recognised the need for assistance to the housing market as essential to help Britain's economic recovery."
Charles Beer, tax partner at KPMG, wasn't so sure. "There were a number of things designed to help the market, but there was no big ticket announcement – it chipped away at the edges."
In the Budget, the Government announced it would extend the "holiday" on stamp duty land tax, first announced in September. The tax break, on property acquisitions of less than £175,000, now runs until the end of the year. Yet the announcement left many grumbling about missed opportunities.
The National Association of Estate Agents had called for the tax to be abolished. Nationwide called on Tuesday for the threshold to be raised to £250,000, a position supported by Michael Coogan, director general of the Council of Mortgage Lenders. After seeing the Budget, he said: "The measures, overall, are unlikely to significantly improve prospects for higher market activity in coming months."
Mr Darling also announced measures to help first time buyers into affordable home ownership. He said an additional £80m would be invested in the HomeBuy Direct Scheme.
The Chancellor announced a £600m fund to push construction groups to restart work on "mothballed" sites.
It is hoped these measures will deliver an additional 10,000 homes in England by 2011. This included provisions to invest £50m to improve armed forces housing, and £100m for local authorities to invest in energy efficient homes.
On Tuesday, the government introduced the Homeowner Mortgage Support Scheme, to protect homeowners who have lost their job in the downturn against repossession. It will also extend the criteria for those looking to draw on the Mortgage Resume Scheme.
Other measures include a government guarantee for new issuance of mortgage-backed securities.
Mr Coogan said: "The most important element of this Budget, for the mortgage market over the long term, may prove to be the new asset-backed securities guarantee scheme.
"This potentially offers an opportunity to restart the capital market funding for mortgages, that will be a crucial factor in delivering an adequate supply of mortgage credit."
Clare Hartnell, head of property and construction at Grant Thornton, said: "Some of the initiatives will help the market, but it could have been bigger."
Case Study: 'I'm sceptical about extra funds'
Koorosh Heshmati, 25 Software developer
Mr Heshmati was looking for a house to buy, but after the property market crashed in 2007 opted to postpone it.
"The stamp duty holiday doesn't affect me because I'm likely to buy a place worth more than £175,000. I'm sceptical about the extra £500m for housing projects. I think it will take a long time to actually affect prices. That said, I'm pleased the Government is taking action to boost supply, and I'm more confident that they're addressing that problem, including through the extra £80m for shared equity mortgages."Reuse content