The Government has launched a major initiative, the Homeowners Support Package, aimed at helping first-time buyers and keeping the housing market moving.
Read the Homeowners Support Package in detail (new window)
Background:
Following a sustained period of rising house prices and strong demand, the UK housing market is currently going through a sharp adjustment, triggered largely by the global credit crisis. People are finding it harder to get mortgages; house prices have fallen; and house-builders are now experiencing difficult business conditions after years of extremely favourable circumstances.
Since the current problems began a year ago the Government has already taken a number of measures to help families adjust to the tough state of the housing market. It abolished stamp duty for people buying houses through one of the existing shared ownership schemes; it allocated government funding to buy up unsold properties to use as affordable housing; and it established the first Local Authority Housing Companies, giving local authorities a greater say and role in building new affordable housing.
More generally, a £2.7 billion tax cut, announced before the summer, will give 22 million people a £120 boost over the next few months and help the nation get through the downturn in a fair way.
Following extensive discussions with housing market experts and practitioners over the last few weeks, the £1 billion Homeowners Support Package builds on this work.
Homeowners Support Package - the key points:
1. Help for first time buyers
- Offering 10,000 more first time buyers currently frozen out of the mortgage market the chance to get onto the property ladder through a new shared equity scheme in a new partnership with housing developer
- A one-year Stamp Duty holiday for all houses costing up to £175,000 meaning that around 50 per cent of all house purchases will be exempt.
2. Help for homeowners in difficulty
- Supporting thousands of vulnerable homeowners facing repossession to remain in their home through a new mortgage rescue scheme
- Reforming the Support for Mortgage Interest scheme to increase help for some of the most vulnerable homeowners on very low, or no, incomes
3. Support for social rented homes
- Bringing forward £400 million of government spending to deliver up to 5,500 new social rented homes, at good price over the next eighteen months while the private sector market remains weak.
4. Support for housebuilders and the housing sector
- Building on the £66 million that has already been allocated, confirming that a total of at least £200 million will be available to buy unsold property from house builders principally for use as social rented housing
- Supporting the industry to manage the new HomeBuy Direct scheme itself, with additional government support to help people into homes and housebuilders to sell homes
- Establishing a clearing house to support those currently training in the sector and maintain long-term capacity.
5. Strengthening mortgage finance markets
- The Chancellor has asked Sir James Crosby to complete his assessment of the options outlined in his July interim review by the end of this month.
Tough choices to ensure fairness:
The package is based on bringing funding forward from future years. In bringing forward these measures the Government pledges to strike the right balance between supporting the economy now and taking the necessary decisions to ensure the public finances remain on a sustainable path.
The Government believes it is right for the economy to allow extra borrowing to fund these measures now, protecting the vulnerable and targeting key pressure points in the economy, to support growth in the slowdown.
This borrowing will be balanced in future to ensure the Government lives within its means, making the tough choices to ensure it is affordable and supports economic growth and stability in the future.
The Government believes that helping families with housing costs and fuel bills has to be the priority and that there is a need to spend this money now to help support the economy in the next few critical years.
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