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The next step for the market

4th December 2008 | back to article listings BACK    print this article PRINT

Yesterday's Queen's Speech was always likely to bring some relevant news for the property sector, particularly when the government had hinted that there would be major economic issues to be tackled.

So it proved. One significant act was the introduction of the Banking Bill, which will seek to provide more stability in the system and turn the currently voluntary banking code into a series of statutory obligations. But the most directly relevant measure concerning the property market was a new announcement on mortgage protection.

Under this plan, those with mortgages who are struggling to pay due to unemployment or a major drop in income (such as losing a job and having to take another with less pay) will be able to have a payment holiday of up to two years. With eight major lenders having agreed to work with the government on the scheme, the plan is to greatly reduce the number of repossessions.

Commenting on this move, Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn said the measure, along with other initiatives from the banking sector itself, will have a major impact. He stated: "Giving people a six month buffer before repossession proceedings start and an interest payment holiday for up to two years should help prevent the serious distress caused when people are put in a position where they have to sell their homes."

In addition to this, he noted, property prices may also be propped up, something that could be of direct concern to investors. Mr Rubinsohn explained: "By limiting the amount of distressed selling, it will also restrict the amount of new property flooding the market and which in turn would provide some measure of support."

Of course, not everybody will win as a result of the measure - those who might be looking for bargains in the distressed sales market could be left empty handed as a result of the move.

At the same time, however, much more may yet be done to help the property market. National Association of Estate Agents (NAEA) chief executive Peter Bolton King welcomed the news of the mortgages plan, but said there are other matters that need attending to, commenting: "There is clearly more to be done and the NAEA looks forward to hearing the measures the government has in store for first-time buyers. New lending will be vital in kick starting the housing market once again."

So while investors may have less in the way of distressed property to buy but a better outlook in terms of prices due to a lack of such homes coming on the market, the prospects for new opportunities arising from the legislative programme for this parliamentary session are not yet clear. Like Mr Bolton King, investors will hope positive action that makes a real difference to the market will help to bring about a recovery sooner than might otherwise be the case.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4522.html. Alternatively, please see our full press release archive.

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