View more on these topics

FTB tax relief could distort the market

The Government should not offer mortgage tax relief for first-time buyers as it would distort the market, according to the Great Housing Market Debate panel.

Speaking last week in London in the debate sponsored by Hometrack, Nationwide chief economist Fionnuala Earley said: “I think it it very difficult to say you should favour one group of buyers over another. It is a very difficult time for first-time buyers clearly and everyone wants to own their own home in this country but by giving specific incentives to particular groups, you introduce distortions into the market.”

Earley pointed out it could inflate house prices even further because of an increase of demand in that sector.

She said: “You have to be very careful tinkering with things like tax relief for certain groups of people, particularly when you cannot identify who that group is. It could be someone returning to the market or it could be the genuine stereotypical first-time buyer.”

BBC economics editor Evan Davis said: “Sometimes, gains and measures to help one section of the buying market actually accrues to the sellers because house prices get more sustained.”

Morgan Stanley chief economist David Miles said he was sceptical about subsidies and tax relief for a particular group of buyers.

He said: “The idea if you take commodities that are essential and expensive for young people with limited income and that the right way to solve it is to subsidise them is a little bit strange. We do not do that with food, clothes or energy, all of which are essential and expensive for people on low incomes. We tend to address that by using the income and tax benefit system.”

Recommended

Flight to interest-only as payment shock hits

Borrowers are expected to switch to interest-only loans to avoid the worst effects of the payment shock as their fixed deals come to an end.Mform.co.uk says around 24 per cent of homemovers and first-time buyers take out interest-only loans and believes this figure may rise significantly.It says the difference in monthly payments on an interest-only […]

Landlords’ gearing at lowest level since May 2005

The average gearing across landlords’ portfolios is at its lowest level since May 2005, according to Paragon.A panel survey of 200 Landlords revealed the average level of borrowing across their portfolios was 36 per cent, down from 38 per cent in the final quarter of 2007.Paragon claims the low level of gearing highlights the strong […]

FSCP disappointed over lack of independent input into FSA review

The Financial Services Consumer Panel says it is disappointed that there had not been more independent input into the FSA’s internal review of Northern Rock.The FSCP says that the FSA should be congratulated for acknowledging its shortcomings but that independent auditors could have provided a wider perspective. Panel Chairman John Howard says: “The FSA concludes […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com