NAEA demands action to stop housing market green shoots wilting

The National Association of Estate Agents (NAEA) has called upon Chancellor, Alistair Darling, to take action to further aid the housing market recovery and avoid sending Britain into a ‘W’ shaped or ‘double dip’ recession, where the market partly recovers but then falls, before eventually recovering again.

The NAEA has called on Mr. Darling for:

- An immediate extension to the current stamp duty holiday
- A longer-term review into the function of Stamp Duty
- Intervention in the mortgage markets to encourage banks to lend again
- Action to improve access to finance for first time buyers
- A suspension of Home Information Packs (HIPs)
- A longer-term review into the function of Stamp Duty

Peter Bolton King, chief executive of the National Association of Estate Agents, 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.”

“It is clear that Stamp Duty is an outdated and unpopular tax that is out of date and out of place in today’s world. The NAEA calls on the Government to commit to examining the future of the tax to see how it can be amended to produce less regional inequality and to stop it acting as a barrier to entry to the housing market. We would welcome the chance to be part of this review.”

Explaining the NAEA’s recommendations regarding intervention in the mortgage markets to encourage lending, Mr. King said:

“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.”

“Moreover, there are still significant consumer concerns about lending and the level of approvals. NAEA July research conducted among 1,860 respondents showed that nearly one quarter felt that the lack of available mortgages was preventing them from purchasing property at the moment, and a majority (57.6%) felt that if the banks were to start lending again it would make a “big difference” to the property market.”

And addressing the needs of first-time buyers, Mr. King said:

“First-time buyers are central to a properly functioning housing market but the lack of mortgage finance is particularly impacting on this group. High loan-to-value mortgages are being withdrawn and the consequent rise in the amount being demanded in deposit means it is becoming increasingly difficult to gain a foothold on the housing ladder.”

“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.”