Darling puts his stamp on preelection budget

A Stamp Duty holiday for first-time buyers, an extension of the Support for Mortgage Interest Scheme and plans to exclude the most expensive properties in an area from the Housing Benefit calculation were among the measures announced by the Chancellor in his preelection budget

In a budget which has been described as hitting the better off Alistair Darling said: “I am determined to do more to help families take that crucial first step on the housing ladder.”

Darling said that while the housing market has now stabilised and begun a slow recovery many first-time buyers, particularly those without large deposits still find it hard to get a mortgage.

He continued: “I want to help them but do so in a way that is properly funded,” as he announced that he will double the stamp duty limit for first-time buyers from £125,000 to £250,000 for two years, meaning that nine out of 10 first-time buyers won’t pay stamp duty.

In a move set to hit the top end of the market, the relief will be funded through an increase in stamp duty to five per cent for residential property over £1million from April next year. The Standard Interest Rate applied to the Support for Mortgage Interest scheme will be maintained until 2010.

“Low mortgage rates have reduced costs for homeowners but many families still face fears over repossession,” said Darling. “The Support for M ortgage I nterest scheme, which I enhanced during the recession is already helping 220,000 homeowners who lost their jobs. To maintain this help during the recovery I will continue to pay this support at the higher rate for another six months.”

In a bid to address Government concerns over “very high payments to a small number of tenants in the most expensive areas” as a result of the current approach to calculating Local Housing Allowance rates Darling announced that from October 2011 the highest rents across the country will be excluded from the calculation of the Local Housing Allowance in each area. This will include the most expensive eight per cent of properties in London.

Other measures include: continuing additional payments alongside the Winter Fuel Payment next Winter, worth £100 to households with someone aged over 80 and 350 to households with someone over female State Pension age; increasing tax credits for families with children aged one and two from 2012 and launching the Saving Gateway in July 2010, where the Government adds 50 pence to each £1 saved by working age people on low incomes.

Following the budget the G overnment, which has prioritised zero carbon homes, will consult on detailed plans to replace the housing finance system with a self financing system.

It is also publishing results from comprehensive checks of local land supply strategies alongside the Budget and from 2010-11 the Government will withhold the relevant elements of the Housing and Planning Delivery Grant from local authorities that fail to produce satisfactory five-year land supply assessments.

The Government has also pledged to bring forward more surplus public sector land and will consider further measures in this area such as introducing targets across government for the number of homes that will be built on public land. The Government will also shortly consult on how a scaled back Section 106 will operate.

Describing the budget as “quiet for the affordable housing sector” the CIH says that it continues to offer good news for many people keen to get on the housing ladder and security for many homeowners needing help to avoid losing their homes. It describes the proposals to address long-standing problems with the planning system and the reform of local authority finances as “change for the long-term good health of the housing sector.”

The CIH also warns that the proposals to reduce housing benefit paid to those in very expensive properties will need to be looked at closely to ensure that people living in high house price areas are not unfairly affected.

Richard Capie, CIH director of policy and practice, said: “Behind the headlines of today’s budget speech is news of two announcements on finance and land supply that should be most prized by the housing sector. They are tantalisingly close and making sure these changes don’t get lost in the noise of the election must be one of the sector’s priorities for the coming months.” The Government’s proposals for the reform of council housing finance are expected tomorrow and CIH is hoping for a substantial grant to stimulate local authority house building.

The news that only 64 per cent of local authorities have a five year supply of land for house building is also an area of concern for the CIH , which welcomes plans to reform the Housing and Planning Delivery Grant to push for greater compliance and remove this major barrier to housing supply.