COVER FEATURE
20
Folkard & Hayward, agrees a more drastic change could have been
implemented.
“We welcome the extended tax holiday but in reality, it’s more of
a long weekend,” he says. “Stamp Duty is an obstacle for many
buyers, particularly struggling first-time buyers who find getting a
foot on the property ladder in London more difficult than most. But
it is important to remember that even in a struggling economy, there
are few properties available in London under the £175,000 threshold,
so first-time buyers in the capital won’t benefit.”
Of course, it was not through Stamp Duty and reluctance that
first-time buyers were steering clear of the market, it was through
lack of available credit. And in perhaps one of the only parts of the
Budget of some substance Darling announced a plan to guarantee
mortgage-backed securities, first mentioned in the pre-Budget
report, will now come to fruition.
“The most important element of this Budget for the mortgage
market over the long term may prove to be the new asset-backed
securities guarantee scheme,” says Michael Coogan, directorgeneral
of the Council of Mortgage Lenders. “This potentially offers
an opportunity to restart the capital market funding for mortgages
that will be a crucial factor in delivering an adequate supply of
mortgage credit.”
Bolton King says this move will be welcomed.
“Our figures show that there is a huge demand for property that
is being frustrated because responsible people do not have access to
appropriate levels of finance,” he says. “Hopefully this measure will
go some way to alleviate that and I would just call on the government
to monitor carefully that this measure has gone far enough and
step in if it doesn’t.”
But some industry figures think even this does not go far enough.
“The scheme to guarantee mortgage-backed securities cannot be
seen as a positive as this has been spoken about before,” says Andy
Cuthbert, managing director of Surrey-based dot financial services.
“What is needed is lenders to be working together as currently they
THE REST OF THE BUDGET
� Alcohol taxes to go up 2%
� Tax on tobacco to go up by 2%
� Fuel duty to rise by 2p per litre from September
� Until March 2010 motorists can get £2,000 discount on new
cars for trading in cars older than 10 years
� From April 2010 Income Tax for those earning more than
£150,000 to rise to 50%
� Tax relief on pensions to be reduced for people on more than
£150,000 a year from April 2011
� Statutory redundancy pay will rise from £350 to £380 a week
� Support for people who have been out of work for 12 months
through the flexible new deal
� Annual limit for tax-free ISAs to rise to more than £10,200 for
over-50s this year and for everyone else next year. Of that
amount £5,100 can be saved in cash
� All under-25s out of work for a year to be offered a job or
training place from January
� £1.7bn extra funding for Job Centre network
� £250m funding to help people get work experience in growth
industries
� Extra funding to create 54,000 new places in sixth form
education
� An extra £9bn in efficiency savings
don’t want to lend as it’s too risky. They are still working at the
wrong percentages and the only thing that is going to help is getting
back to 90% LTV.”
Melanie Bien, director of Savills Private Finance, agrees.
“This should improve liquidity a little but it is a drop in the ocean
compared with the amount of money required in this area,” she
says. “The securitisation market has been virtually closed,
excluding niche lenders that helped boost the volume and breadth
of lending pre-credit crunch. Only AAA-rated mortgages qualify,
which means anything greater than about 60% LTV or with even the
smallest whiff of sub-prime will be excluded. Only prime mortgages
will be deemed suitable, which arguably don’t need securitising
anyway.”
There was some good news for anyone wishing to get involved in
shared equity as Darling announced a further £80m would be
invested in the government’s HomeBuy Direct Scheme. According
to the chancellor, it has received interest from more than 32,000
people since September last year. Those figures seem less impressive
though if Conservative leader David Cameron’s declaration that not
a single sale had been made through the scheme is true.
Richard Stone, director of affordable housing broker SPF
Sherwins, says investing in the scheme is fruitless.
“The government has missed a trick here,” he says. “This only
supports house builders and those who want to buy new-build. Why
didn’t it go to MyChoiceHomeBuy where demand is outstripping
supply? These are happy days for developers.”
Darling also announced the government will continue its ISMI
scheme for another six months for those who have lost their job as
long as they are looking for work.
“Last year, I increased and extended the ISMI scheme, which
covers mortgage interest payments for those who have lost their
jobs,” he says. “Today I can announce that I will maintain the higher
level of support for a further six months to help home owners as they
look for a new job.”
� Child tax credit to rise by £20 by 2010
� Child trust funds for disabled children to rise by £100 a year or
£200 a year for severely disabled children
� Struggling companies can reclaim taxes paid in the last three
years until November 2010
� Businesses’ main capital allowance rate doubled to 40%
� £750m investment fund to help emerging technologies sector
� Grandparents of working age who care for their grandchildren
can count this as work towards entitlement for the basic state
pension
� Winter fuel allowance remains at £250 for over-60s and £400
for over-80s until 2010
� Basic state pension will be increased by at least 2.5%,
� Limit on savings pensioners can have before their pension
credits are reduced will rise from £6,000 to £10,000 from
November
� Britain commits to cut carbon emissions by 34% by 2020
� £1bn to support low-carbon industries
� £525m for offshore wind projects by 2011
� £435m support for energy efficiency schemes for homes and
public buildings
� £405m to encourage low-carbon energy manufacturing
MORTGAGE STRATEGY April 27, 2009
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