ROOF Blog

First-time buyers were dealt a blow in the pre-budget report when the chancellor announced that the current stamp duty holiday would not be extended beyond the end of the year.

Alistair Darling also scrapped plans to raise the threshold for inheritance tax from £325,000 to £350,000. Currently, anyone buying a property for £175,000 or less avoids paying one per cent stamp duty.

This threshold has been in place since September 2008 when the chancellor increased it from £125,000.

Since the stamp duty holiday was introduced, about 132,500 house-purchase mortgage transactions have escaped the tax, according to research by the Council of Mortgage Lenders.

This accounts for more than a quarter of the 486,400 house purchase loans in the period.

The National Housing Federation (NHF) has welcomed the government’s pre-budget report that money for social houses will be brought forward, but called for the funding rules to be changed immediately. The NHF said that unless money is used to pay builders of new social homes higher grant rates, the supply of new affordable housing could dry up next year. HAs currently pay around 60 per cent of the costs of building new social homes through raising cash from private lenders and selling homes on the private market, with government grants covering the remaining 40 per cent. However, the credit crunch has affected badly the ability of the associations to sell on the open market, and the money that the government is bringing forward must be used to pay for increased grants.

Alistair Darling announced details of the pre-budget report yesterday. Besides increasing pension credit, income support and jobseeker’s allowance, a number of measures were specified to help homeowners. The recently announced £200 million mortgage rescue scheme where the government buys a home and then rents it back to the former owners, which will help up to 6,000 vulnerable households and is available from January, is to be extended to include those with second charge mortgages also. He also announced an extension of the income support for mortgage interest scheme (ISMI) which helps homeowners pay interest payments on their mortgages if they become unemployed, which would be paid on the interest to loans of up to £200,000 now. A ‘lender panel’ is to be created that would monitor how mortgage companies lend to both individuals and businesses. The chancellor also said that mortgage lenders need to develop ‘creative and sustainable’ solutions to help borrowers stay in their homes such as mortgage holidays or reduced payments, and has told lenders to wait three months before taking action against borrowers unable to make their monthly repayments. Free debt advice to the value of £15 million will be provided, and £775 million of funding for a promised boost social housing will be fast-tracked from the 2010/11 spending review. By 2010 empty properties with a ratable value below £15,000 will be exempt from business rates, which the chancellor estimates could exempt as much as 70 per cent of empty buildings.

This afternoon chancellor Alistair Darling will announce the pre-budget report that is expected to introduce tax cuts, including cutting VAT from 17.5 per cent to 15 per cent, while increasing government spending, in a boost to get the economy back on its feet. Also expected to be announced are a series of measure to stem the number of repossessions, which last week increased 12 per cent on the previous quarter, including a three months’ grace period before lenders start proceedings; allowing owners to sell parts of their homes to councils; and help with mortgage payments for the newly unemployed.