He giveth….he taketh!

He giveth….he taketh!

The Chancellor had every opportunity to win votes and give the housing market the important boost it needed in this weeks pre-election budget. Did he? That’s for you to decide.

The budget has helped first time buyers with the abolishment of Stamp Duty on all properties under £250k to the end of 2011. Great news for those looking to join the property ladder, but raises confusion within the mortgage market. What is a first time buyer? Most lenders class a first time buyer as someone who has not had a mortgage for, say, one to three years. Under the new offering will these purchasers be counted out? There is a need to define who will and who won’t still fall foul of stamp duty (unclear at the time of writing this article). Watch this space!

Whatever the ruling, it is a welcome boost to the market. That said, he giveth, and he taketh away! Those purchasing above £1m will now ‘enjoy’ a 1% increase in stamp duty which will be 5% from April 2011.

There is still a lack of property for sale in the market and where are the incentives for those who want to sell and trade up? Let’s be realistic……in the West Sussex area, the gap from a two bed to a three bed property is quite substantial and sits right around this threshold. So if the latter are to sell (at say £225k) and have to pay 3% stamp duty on their new purchase (say £260k) in addition to estate agency fees and the cost of a HIP, whilst their purchasers pay minimal fees, could this deter home movers? Is this a ploy?

A fundamental budget flaw seems to be the continued reliance on the housing sector to drive the economy forward. Whilst banks continue to lend at the bare minimum (their clever advertising paints a different picture) and with few really attractive first time buyer mortgage packages, there were other areas Mr Darling might have looked at to stimulate the market. The stamp duty ‘nudge’ is a sop to catch votes and needs to recognised as such.