Autumn Statement 2011: Calls To Increase Stamp Duty
The Chancellor has outlined plans to boost home ownership, but lenders and estate agents said the Government could have helped the market further by extending the stamp duty "holiday" for first-time buyers.
George Osborne told Parliament he plans to reinvigorate the right-to-buy, which he described as "one of the greatest social policies of all time," bringing home ownership within the grasp of millions of families.
This policy, closely associated with former Prime Minister Margaret Thatcher in the 1980s, had been "slowly and stealthily strangled" by the last government, Mr Osborne said.
The Government forecasts an extra 100,000 sales could be made as a result of its new schemes, with those wanting to buy their council homes being offered discounts of up to 50%. For each home purchased, the Government said it will provide an additional affordable home.
The Government also plans to help first-time buyers by underwriting mortgages on new-build homes to make the "dream of home ownership" a reality for more people. It is hoped the scheme will allow people to purchase newly-built homes with deposits of around 5% rather than the 20% now regularly demanded by commercial lenders.
Many would-be first-time buyers have found themselves trapped in the rental sector as they cannot raise the large deposits needed. Lenders have gradually been bringing back deals needing lower deposits but there are complaints that many are finding the terms too restrictive and also fears of the eurozone crisis pushing borrowing costs up.
John Cridland, CBI director-general, said: "Unfreezing the housing market is an important step on the confidence-building ladder. Mortgage indemnity guarantees are the best way to bridge the problem of loan-to-value ratios."
There is currently a stamp duty concession for first-time buyers but this is due to end in March next year, and calls have been made to extend this or risk distorting the already fragile market, where the proportion of first-time buyers is already at a three-year low.
Building Societies Association director-general Adrian Coles said: "It is disappointing that the Government has decided not to extend the stamp duty holiday for first-time buyers on properties under £250,000."
He said that despite the recent, welcome, housing strategy announcements "it feels as though the Government is giving with one hand, whilst taking away with another".