Do the stamp duty stats add up?
Michael Millar 4:22pm
I just got some stats about how many homes bought in the last year would have been covered by the stamp duty suspension were it to have come in 12 months ago. I'm surprised by the number frankly - no doubt I've spent too much time in London where a place for £175,000 is something of a pipedream. Sales last year that would have been caught were as follows:
- Between Jan and Dec 2007 - 320,129 sales
- Between May 2007 and Apr 2008 - 294,846 sales
There was a total of 998,000 sales in 2007, so the £175,000 threshold would have covered about one in three purchases.
I'm still waiting to hear how the banks will respond to this. At the moment they are only giving out money to people who they think stand a good chance of paying it all back at some point and who have decent deposits. I just can’t see how raising the 1% bar will help this - surely if you couldn’t get that 1% together (or could just afford it and need the help) the banks will still see you as a poor bet and hold onto their cash, won't they?
On top of this there's all sorts of questions about how the new shared equity scheme will work (whereby buyers will be offered an equity loan of up to thirty per cent of the value, co-funded by the government and the developer, free of charge for five years). Surely this must come on top of a deposit? If not, then you're encouraging people to buy who have no money of their own - and we know where that got us.
The Treasury has been keen to separate today's measures from the Crosby report into kick-starting the housing market (out in October), but I can’t see how this separation works. If the banks are lending very selectively because there's not enough cash to go around, surely sorting that is the first step. I'd be very interested if someone could point out if I'm missing the point because, frankly, my head hurts.
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Comments
ma379zda
September 2nd, 2008 5:30pmc856t
The Green Jacket
September 2nd, 2008 6:24pmDoes this mean Mr Millar that you have now reversed your previously absurdly optimistic forecasts regarding the housing market, and like the rest of us are wondering how to bail out before our pile of bricks is worth nothing?
Mousecatcher
September 2nd, 2008 9:31pmDon't forget - in certain poorer areas stamp duty isn't payable on prices below £150,000 anyway. So this latest scheme isn't perhaps as generous as it seems at first sight.
Caveat emptor
September 2nd, 2008 10:27pm"At the moment (banks) are only giving out money to people who they think stand a good chance of paying it all back at some point".
Ahem, isn't that what bank managers are supposed to do? Or have I missed something?
Ben Elford
September 3rd, 2008 12:01amThe only positive aspect of the stamp duty announcement is that it removes the uncertainty introduced by the (Downing Street?) rumours of other kinds of stamp duty holidays being contemplated. That is, unless the Chancellor has to backtrack on this, as he has on other announcements.
But it's insignificant, compared with other factors affecting the market, especially when the monthly fall in prices is as steep as at present.
And what will be the effect on property prices above the £150,000 threshold? And the consequent effect on properties at or below £150,000 at present?
All in all it could serve to drive prices down without increasing the availability of mortgages. Not much of a vote winner, then.
It could be that
Ben Elford
September 3rd, 2008 12:03amEr, that should have read £175,000 (twice).
Hereford
September 3rd, 2008 7:52amNobody from Government has talked about the methods they will use to vet candidates for this bung to ensure they had the means to service the ongoing debt, not just for the bung, but for the rest of the mortgage.
Of course this measure will have the side effect of increasing the population of Labour's client state. As more people get into difficulties and transfer part of their ownership into the public sector.
I also wonder how much more intrusive and dictatorial a local authority will want to be when they own part of your house. I know some people in shared equity schemes and what they can do with their house, even down to who they can sell their part to is heavily restricted.