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Property Must be Central to Pre Budget Report

19th November 2008 | back to article listings BACK    print this article PRINT

Stuart Law, Chief Executive of Assetz comments ahead of the Pre-Budget Report on Monday 24th November:


"The Chancellor must be bold and decisive in next week's pre-budget report, and make strides to bolster the property market and aid the start of an economic recovery in 2009. The Bank of England accepted last week that stability in property prices was far more important to the economy than they had previously thought.

"Action needs to be taken on minimising repossessions in the housing sector. Whilst the Government should not interfere directly with the Bank of England's independence and call for further base rate cuts that will be coming quickly anyway, it should focus on its control of the banks in which it has taken a stake. It must ensure that as the Bank of England base rate falls to 2% or lower, banks continue to pass on the savings to the 50% or so of mortgage holders who are on tracker or variable rates.

"If the Government was to get involved in forcing banks to lower the cost of mortgages or even subsidising all forms of mortgages with a reinstatement of MIRAS for the next year or two, it would be far more effective than just a simple tax cut, as it will directly benefit the housing sector which underpins the banks’ balance sheets and indeed the wealth of the country as a whole.

""The Chancellor could take the opportunity to kick start the market by helping the property investment sector, with an easing of stamp duty tax rules for multiple property purchases. Currently, linked purchase transactions, such as an investor agreeing to buy four properties from a developer, are subject to stamp duty tax at 4% if the total purchase price is above £500,000, where the aggregate value is over £500,000, even if the individual properties are below the £500,000 threshold. A significant return of investors to the market would signal a turning point in the crisis and the start of the recovery.

"We also call for the unfortunately timed empty property tax to be scrapped permanently. Imposing business rates on buildings that are vacant in the middle of a recession is highly inappropriate. Given the slowdown in the property market, it will lead to ‘bombsite Britain’, where developers owning flattened sites in city centres are forced to leave them derelict for a long time before redevelopment.

“The overhang of unsold houses built by developers needs to be eroded in order for house prices to stabilise. We call for accelerated funding of housing associations that will assist them in purchasing some of this stock from the developers for use as social housing. This will help reduce housing stock that is unsold on the market and in turn help to support prices."

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4540.html. Alternatively, please see our full press release archive.

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