With little sign that present Government policies are going to generate the growth that will help us repay the mountain of debt owed by the public and private sector leading agents are calling for policies to stimulate the housing market.
Grenville Turner, Group Chief Executive of Countrywide, said: “A recovery of the housing market is fundamental to economic recovery. According to Government figures, even in its current crisis state, housing supply accounted for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK. Furthermore, it is estimated that twice the number of jobs are created in the supply chain, e.g. service jobs and retail income. The potential economic benefits in a stronger housing market demonstrate the importance of implementing practical solutions now.
Current transaction volumes are simply not sustainable. Based on current levels of activity, the average home owner moves house once every 25 years as opposed to once in every 12 years which has wider implications for society, the labour market, and the UK economy.The valuable economic contribution that the property market makes is being overlooked and there is a risk that current Government policy will be ineffective or, even worse, cause unnecessary volatility.
Some of the critical factors hindering the UK housing market are mortgage accessibility, availability of quality housing stock and lack of investment in the buy-to-let sector to meet the needs of the growing private rental sector. Whilst the Government has introduced some measures to increase activity in the housing market, they must have a clear strategy to achieve a balance of demand and supply through tax relief and incentives with the aim being to reduce volatility in the house market.”
Beresfords focus however is on stamp duty calling for a lower 2% stamp duty threshold between £250,000 and £375,000. They have assessed the cost of this tax change as creating a £23million shortfall in tax revenue which would be offset by sales increase and economic benefit. If adopted this new tax threshold estimated savings of up to £3,750 per borrower.
Paul Broadhead, head of mortgage policy at the Building Societies Association, has also talked with Mortgage Introducer where he is also calling for stamp duty reform.
“We are hoping that the Chancellor will give support to both borrowers and savers next Wednesday.
“The reality is that the last three years of very low bank base rates and relatively high inflation have had some unintended consequences.
“Whilst it has been a boon to many existing mortgage borrowers, it has effectively delivered a kick in the teeth to savers, and reduced the flow of mortgage funds for new borrowers too.
“It hasn’t been easy for businesses, including brokers either.
“Whilst we don’t expect any imminent changes to the bank rate from the Bank of England, and frankly don’t want any sudden shocks anyway, we do believe that the Chancellor can do some things to help the challenging markets.
“For borrowers, we continue to push for a change to the slab structure of stamp duty as it continues to cause market distortions which are particularly unhelpful in the current fragile market.
“The Chancellor could remove distortions by charging stamp duty on a marginal system similar to income tax and rates could be set to ensure that there is no net effect on tax revenue.
“We are convinced that the planned removal of the stamp duty holiday for first time buyers on properties of £250,000 or less is also unhelpful.
“Taking something away is always more negative and we are already seeing a change in consumer sentiment with an increase from 10% in December 2011 to 12% in March 2012 of GB adults citing stamp duty as a barrier to home purchase.
“This is the first time since March 2010 that this figure has increased in the BSA’s quarterly Property Tracker.
“We all know that deficit reduction is still top of the Government’s agenda, but these measures would help millions of consumers a little, and consumers who feel better tend to spend more which can’t hurt the growth prospects of UK Plc.”