Gordon Brown has axed stamp duty on house purchases below £175,000 for one year as part of a raft of measures unveiled today to help kickstart the housing market
The stamp duty cut was part of a £1bn rescue package unveiled by Communities and Local Government secretary Hazel Blears to ‘meet current challenges in the housing market’.
The measures include:
- Offering 10,000 first time buyers frozen out of the mortgage market the chance to get onto the property ladder through a new £300m shared equity scheme. Buyers, whose household income is under £60,000, can apply for an equity loan of up to 30% of the value of the house, co-funded by the government and the developer and which will be free of charge for five years. However, a BPF spokesman said this measure may recreate some of the problems which cause the credit crunch as homeowners may put undue stress upon their finances through access to ‘free loans’ which removes the need to inject any personal equity and creates a 100% mortgage scenario once again.
- supporting up to 6,000 of the ‘most vulnerable’ homeowners facing repossession to remain in their home through a £200m mortgage rescue scheme. Local authorities will assess applications for support and can offer homeowners a shared ownership scheme where a registered social landlord buys a share in the property or provide an equity loan or offers a sale and rent back scheme at a level the home owner can afford.
- a £100m investment to support the ‘support for mortgage interest’ reform unveiled today by the Department for Work and Pensions which could help prevent a further 10,000 repossessions. It said it will shorten the waiting period before ‘support for mortgage interest’ is paid from 39 weeks to 13 weeks for new working age claims from April 2009. The capital limit for new working age claims will also be increased to £175,000 from April next year.
- a £400m boost in spending power from existing budgets for social housing providers, including registered social landlords and councils, to deliver 5,500 more social houses over the next 18 months by bringing funding forward. Local authorities with existing stock will able to apply for this grant to build social housing, alongside registered social landlords.
- working with regional development agencies to support the ‘most critical regeneration schemes with the most potential to transform their communities’.
Blears said: ‘This Government is committed to practical action to help those most affected by the current state of the housing market. We are working to make sure everyone struggling to pay the mortgage gets support and advice. We are giving a leg-up to first-time buyers keen to own a place of their own.’
Housing Minister Caroline Flint said: ‘We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The measures announced today will go significantly further in supporting families who may be facing difficulties at the moment, while ensuring we maintain our focus on delivering more affordable homes over the long term.
‘We must ensure that repossession is only ever a last resort. The Government is determined to play its part, and others must do the same. Lenders should be exhausting all avenues before repossessing, including looking at how they could extend mortgage rescue schemes to householders.’
The Government has also said it will make funding available to buy unsold homes off the market, increase shared equity support for first time buyers, expand free legal representation in county courts for households at risk of repossession, and provide more debt advice.
The stamp duty changes come into effect tomorrow. Previously stamp duty had to be paid on all purchases of more than £125,000.