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Suspense over as suspension starts

2nd September 2008 | back to article listings BACK    print this article PRINT

This week has seen investors, housebuyers and every other stakeholder in the property industry waiting with baited breath for news of the government's plans to boost the housing industry.

Ever since his now notorious interview with the Guardian in which he suggested Britain could be facing its biggest economic crisis in 60 years and used florid language to describe how he felt the public perceives Labour's handling of the matter, Alistair Darling must have been hoping for some good news. So far this week others have been asking for him to provide it.

This morning director general of the Association of Mortgage Intermediaries (AMI) Chris Cummings suggested a range of measures his organisation were keen to see. On the stamp duty issue he said: "We are calling for a full and urgent review of the current stamp duty regime. The Government should urgently review the tax thresholds. If stamp duty had risen with the rate of inflation the entry level would exclude most first-time buyers as opposed to the current level of £125,000."

In the event, Mr Darling did not announce such a review. What he did reveal is that from tomorrow (September 3rd) the lower threshold will be set at £175,000, rather than the current £125,000, for exactly a year.

A possible downside of this is that the old rate may come back in 12 month's time, with no major review of the sort the AMI would like to see. On the other hand, it may be an interim measure while the government considers its options with a view to making major changes in the future, which in Labour's case will be on a timescale not going beyond June 2010 when a general election would have to be called.

Whatever does happen with the tax in the future, for those buying cheap homes this is good news. In its response to the news, the Chartered Institute of Housing (CIH) said: "CIH welcomes the clarity this has given to potential purchasers following recent uncertainty and is a good measure by government to help boost confidence and provide a degree of support for borrowers in the short-term."

The CIH had much else to comment on too, because the government also introduced a range of further measures. These included interest-free loans for up to five years to the value of 30 per cent of homes to get 10,000 more onto the ladder, something the CIH welcomed warmly. Another move was to bring forward from 39 weeks to 13 the wait before mortgage holders could receive Support for Mortgage Interest, something the AMI had called for.

How much effect this will have on the market is unknown, although some (like the CIH) will applaud the government for trying and of course political opponents will not. Much may depend on wider economic issues, but at least for now, those who said stamp duty was part of the problem will be able to consider that this, at least, has been eased.

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