Government must avoid ‘W’
In a submission delivered to Downing Street, the NAEA calls on Mr Darling to:
- Immediately extend the current stamp duty holiday
- Conduct a longer-term review into the function of Stamp Duty
- Intervene in the mortgage markets to encourage banks to lend again
- Improve access to finance for first time buyers
- Suspend Home Information Packs
Peter Bolton King, chief executive of the NAEA, said: “The current Stamp Duty holiday, for properties up to £175,000, is due to cease at the end of this year. This, coupled with the reversion of VAT to its original rate of 17.5% – and possibly beyond in the future – threatens to cause damage to the fragile recovery we have so far seen in housing sales, just at the time when further stimulus is drastically needed.
“The lack of available mortgage finance is significantly hampering the supply of, and access to, mortgages. Despite considerable public pressure, banks continue to restrict access to mortgage finance and charge rates far higher than the current level of interest rates. A more interventionist solution is now required to force banks to lend again.
“The NAEA calls on the Government actively to encourage lenders to provide high loan-to-value mortgages to enable first-time buyers to enter the market. We recognise that high loan-to-value mortgages carry additional risk for the lender, so we are calling on the Government to actively promote the use by lenders of Mortgage Indemnity Guarantees (MIGs) or Mortgage Insurance on properties with a high loan-to-value ratio. We also call on the Government to examine the viability of running a state-backed MIG scheme for lenders.”