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Darling failed on the home front

Although the Chancellor had, admittedly, little money to give away in his second Budget, it is a real shame that so little was done to kickstart the housing market.

With the majority of measures announced beforehand, there was little of real surprise and the overall feeling was one of disappointment and missed opportunity.

Although Alistair Darling confirmed that an extra £20bn in mortgage lending will be available this year, that is still a drop in the ocean compared with what is really required.

He also said he would “support homeowners facing problems” via the Homeowners Mortgage Support Scheme but, with only a handful of Government-backed lenders joining up, many borrowers will not be able to access this.

There was nothing to specifically address the lack of high loan-to-value mortgages either, although guaranteeing new mortgage-backed securities should improve liquidity to a degree.

This move was recommended in the Crosby review and it feels as though we have been waiting an age for it to be finally implemented. But again, £50bn does not look like enough cash and only AAA-rated mortgages qualify, which means that anything greater than around 60 per cent LTV or even the smallest sniff of sub-prime will be excluded.

It is also only going to benefit deposit-taking banks and building societies, not the smaller niche lenders which were so prominent before the credit crunch hit and which relied on the securitisation market to operate.

As expected, the stamp duty holiday is to be extended to the end of the year, with the Chancellor announcing that 60 per cent of properties will be exempt.

This will help some first-time buyers but, in not extending the stamp duty exemption to all properties, not just those costing less than £175,000, the Chancellor missed an opportunity to boost the housing market. £175,000 will not buy you much in the South-east or London, even after the significant house price falls seen since the peak in 2007.

Developers and the construction sector seemed to be the real winners in this Budget with £600m of extra financial support to kickstart housebuilding.

But it is not so much the shortage of homes that is the biggest issue in the short term, more the lack of mortgage finance. Helping builders is all well and good but would it not have been better to make more money available to ensure lenders are lending and improve the availability of mortgage finance rather than help developers build more homes that people cannot get mortgages to buy?

As for the £80m extension to the shared-equity scheme, yet again this seems to be targeted at keeping housebuilders happy or those who want to buy newbuild. Why didn’t it go to MyChoiceHomeBuy where demand is outstripping supply?

As far as the housing market is concerned, this Budget missed several opportunities to improve the situation, which is lamentable.

Budget 2009 housing and mortgage measures

Stamp duty

Stamp duty holiday for properties under £175,000 extended for four months, until December 31, 2009.

Funding for housebuilders

£400m has been pledged to help finance stalled commercial housing developments. A further £100m has been pledged to help local authority social housing projects.;

Extension of income support for mortgage interest

The support for mortgage interest scheme to help homeowners cope with mortgage interest payments has been extended for a further six months.

Support for mortgage-backed securities

The existing credit guarantee scheme has been extended to allow the banks and building societies eligible to participate in the CGS to extend the funding to residential mortgage- backed securities. Shared-equity schemes

The Chancellor announced a further £80m for the HomeBuy Direct shared-equity scheme.


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