Your Money: First priced out, then stitched up

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The Independent Online

First-time buyers received a smidgen of good news last week as the Bank of England kept the base rate on hold at 4 per cent. But interest rates are likely to rise sooner rather than later, and with the number of first-timers already falling dramatically, this could be the final straw for many struggling to get on to the property ladder.

The latest survey from the Halifax reports that eight out of 10 towns across the UK are now unaffordable to most first-time buyers. On top of that, stamp duty - levied on homes worth at least £60,000 - was paid for the first time last year by the average person entering the UK property market.

The number of landlords in Britain is burgeoning. As they snap up the most affordable properties on the market, novice buyers are growing ever older and are forced to buy miles away from their place of work.

Lenders have their part to play in offering incentives and extra help to first-time buyers. But the Government must also do its bit: Gordon Brown could start by index-linking the £60,000 stamp duty threshold in his Budget.

But given that the duty raises billions of pounds for the Treasury, the prospect of this happening is, sadly, highly unlikely.

Testing times for cover

Much attention has been focused on the 600,000 homeowners who will now be able to get buildings and contents insurance because Norwich Union's digital flood map, which went live last week, will show they aren't at serious risk of flooding.

But the 400,000 or so people whose homes are now rendered virtually uninsurable have been largely forgotten. If you aren't one of them, you're probably not concerned because your premiums might well be reduced if your home is less likely to be flooded than your neighbours'.

Yet look at it this way: while it's flood risk in the news now, what's the next danger insurers will want to measure? Subsidence is the obvious one, but where does it end: crime rates, bad DIY? I get the feeling the industry has only just begun.

And then, of course, there's the most controversial step of all: genetic testing of potential clients by insurers. The moratorium on using such information to calculate premiums runs out in 2006, when the issue will be up for debate again. Many insurers see genetic testing as a way to bump up the premiums for those who have a history of illness in the family.

The creation of an insurance underclass with no hope of obtaining cover is not far off. And while nobody wants to pay higher premiums to cover someone who is high risk, the most vulnerable in society need protecting. Step forward the Government, once again.

m.bien@independent.co.uk

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