Alistair Darling has not done enough to revive the ailing housing market, key industry bodies are claiming.
The chancellor used his budget speech to announce a number of measures aimed at enticing buyers back to the market and freeing up vital
mortgage credit.
Chief among these was the extension of the stamp duty holiday for homes under £175,000 until the end of the year and the introduction of a scheme to guarantee mortgage-backed securities.
Fighting a blaze with a water pistol
But industry players accuse the chancellor of underestimating the scope of the problem, describing his measures as “trying to fight a fire with a water pistol”.
National Association of Estate Agents chief executive Peter Bolton King believes that Darling needs to scrap stamp duty outright if he hopes to encourage first time buyers back into the market.
“The
housing market is the engine of the UK economy and it is likely that this budget will be remembered as largely ineffectual given the magnitude of the problem,” says King.
"In this difficult economic time, Mr Darling could have seized the opportunity to encourage first time buyers to the market and to send a signal of confidence that may have reverberated around the economy.
"Instead he has tried to choose a path to please everyone, which I suspect will please no one."
Asset backed scheme is key
The Council of
Mortgage Lenders (CML) agrees the budget measures are unlikely to make much of an impact overall, especially in the short term.
"The chancellor had little room to make substantive interventions, so there are no real surprises in this list,” says CML director general Michael Coogan. “The measures overall are unlikely to significantly improve prospects for higher market activity in the coming months.”
However, Coogan adds that the asset backed securities guarantee scheme may well prove important in the long run.
The scheme provides an opportunity to restart the capital market funding for mortgages that will be “a crucial factor” in delivering an adequate supply of mortgage credit, says Coogan.
A full list of measure for the property market
* The introduction of a scheme to guarantee mortgage-backed securities, which the CML has been recommending for some time
* Maintaining the standard rate of 6.08% at which income support for
mortgage interest (ISMI) is being paid for a further six months (to December 2009)
* Extending the criteria for mortgage rescue (the scheme being delivered via local authorities) so that negative equity cases are not automatically precluded
* A new £20 million scheme for local authorities to provide loans to families at risk of homelessness
* An extension to the end of the year of the £175,000 starting threshold for stamp duty
* An £80 million extension to the Homebuy Direct scheme
