Who wins in this re-arrangement of the housing market deckchairs announced by the Prime Minister this morning? "David Cameron," comes the answer from one of those oh so sharp political analysts that litter the press gallery corridor.
That’s as maybe and Mr Brown does not seem to have impressed even his own backbenchers with the housing package. Scottish buyers should be pleased though. The one year suspension of Stamp Duty will have a disproportionate effect in Scotland. By increasing the threshold to £175,000, the percentage of first time buyers who will not have to pay stamp duty will increase from just under 70% to just under 90%.
In our devolutionary age some of the measures only affect England and others are comparable to action already being taken by the SNP government in Holyrood. With some help I’ve done a compare and contrast.
First, the announcements that anyone trying to get on the housing ladder across the UK could benefit from:
A Stamp Duty Holiday for properties worth £175,000 or less.
This was floated, denied, speculated on all summer and then plucked out of the hat by the chancellor this morning. It applies across the UK but there could be a disproportionate benefit to the Scottish housing market where the average house price is £155,691. So, the average saving will be £1556 on each transaction and the market is still rising. Prices in Scotland were 4.6 % up in the second quarter of 2008 compared to the same three months last year.
In contrast, London house prices average £371,983 so the concession will have little effect there, so better to carry on renting in the capital and watch prices fall. In Wales the average price is £133,341, but that is in a falling market.
Income Support for Mortgage Interest
£100 million to allow Income Support for Mortgage Interest to kick in after 13 weeks of unemployment (currently 39) and an increase in the capital limit to £175,000, up from £100,000. This little known benefit to help those in unemployment maintain their mortgages will apply across the UK.
Help for First time buyers
A £300m shared equity scheme that will allow local authorities and housing associations to loan up to 30% of a deposit on a new house purchase to 10,000 first time buyers. No charge on the loan for the first five years.
Already has a Low Cost Initiative for first time buyers. A shared equity scheme helping people to buy on the open market operates in ten local authority areas - Edinburgh, East Lothian, Midlothian, West Lothian, Perth and Kinross, Aberdeen City, Aberdeenshire, Moray, Highland, and Stirling. There is no charge on the loan and the owner generally pays 60-80% of the price of a home with the remaining stake funded by government..
The open market scheme is part of £250 million being spent over the next three years on shared equity new supply - enabling local authorities or housing associations to build new rent to buy properties
Help for those in mortgage trouble
£200 million mortgage rescue scheme for 6000 homeowners facing repossession allowing social landlords to clear the debts and rent back the homes to owners.
Ahead of the game with £25 million for the Home Owners Support fund. Run through the local authorities and housing associations to take over debts and rent houses back to defaulting mortgage payers.
A £400 million boost in the spending power of social housing providers including councils. This enables 5500 more houses to be built over the next 18 months by bringing forward investment from future budgets. It means the return of council house building in England after decades of decline with cities like Liverpool leading the way.
With the same budgeting trick £100 million is being used to accelerate the social house building programme next two years. One snag, some of the £40 million is expected to come from council budgets, already strained. By 2011 the Scottish government hope to spend £1.5 billion to create 21,500 new affordable homes. In Scotland a £25 million council house building support fund programme was announced to encourage local authorities to build new council houses.
So broadly the same measures seem to be in place in Scotland and England with the Scottish government having shown how nimble it can be to put all this is place early on. Both governments, you'll notice, are robbing future budgets to make their respective housing packages works. Who wins might be one question? Who pays is another.
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