News

2 September 2008

Cautious Welcome to Government Move to Boost Property Market

Changes announced today by the Department for Communities and Local Government to boost the flagging housing market have been cautiously welcomed by property professionals at Beswicks Solicitors.

Key cross government measures include a £1 billion housing package, helpful changes to Stamp Duty Land Tax and assistance for homeowners facing repossession. 

According to Rebecca Howle, property solicitor with Beswicks “The housing package is designed to assist first time buyers, support homeowners at risk of repossession and provide support for the house-building industry.”

“Stoke on Trent is a prime candidate for a chunk of the extra funds available, with new build developments currently being worked on at the Waterside development in Hanley, Lock 38 in Cliffe Vale and Churchill Park in Burslem to name a few.

The government will offer 10,000 first time buyers the chance to get onto the property ladder thorough a £300m shared equity scheme.  There is also £200m available in a mortgage rescue scheme for 6,000 of the most vulnerable homeowners who are facing repossession to remain in their home.  There is a £400m boost in spending power for social housing providers such as registered social landlords (RSLs) and councils to enable them to provide 5,500 more social houses over the next 18 months. 

Help of this kind will be targeted via Regional Development Agencies such as Advantage West Midlands to support the most critical regeneration schemes to ensure that the maximum potential is achieved.  Local RSLs will be pivotal in delivering these packages of assistance, currently Beth Johnson Housing Association, Staffordshire Housing Association and Midland Heart Ltd all offer houses for sale under existing versions of the Homebuy scheme.  It is anticipated that the new scheme will be offered through some or all of these associations.

For the Mortgage rescue scheme, it is intended that Local Authorities will assess applications and eligible homeowners will be offered one of three options.

  • Shared ownership where a registered social landlord buys a share of the Property which provides a capital sum to allow the homeowner to reduce their mortgage and its repayments.  The RSL will then issue a shared ownership lease to the homeowner with an option to re purchase the share back in the future.
  • Shared equity where a RSL provides an equity loan as a second charge on the property to enable the mortgage to be reduced.  Details of how the equity loan will be repaid have not been decided but current schemes provide for no repayments until the property is sold on and then a percentage of the future sale price is repaid to the RSL on the same percentage as the equity loan.
  • Sale and rent back where a RSL buys the property and clears the debt and rents the Property back to the owner at an affordable rent.

The help for first time buyers (whose household income is under £60,000) will be offered under the Homebuy Direct scheme to assist in buying new houses.  The buyer will be offered an equity loan up to 30% of the value of the Property and will be co-funded by the government and the developer.  The loan will be free of charge for five years.  This scheme also supports the house building industry by identifying buyers for new homes ensuring that the industry can survive the current climate.

According to Rebecca Howle “The influx of such assistance to first time buyers will provide a massive boost for developers and may act to encourage the continued redevelopment of Stoke.  Renewed buoyancy in the new build housing market in the City can only be positive for the wider market, with more first time buyers purchasing properties, existing homeowner will have more confidence in the long term stability of house prices to also consider moving.”

The Chancellor has also announced that Stamp Duty Land Tax will not apply to purchases of residential property of £175,000.00 or less from Wednesday 3 September 2008.  This provision will last for a year and is again aimed at providing help for those seeking to get on the property ladder and also to stimulate a sluggish property market.  This scheme applies to all residential property and will result in an estimate half of all homes nationwide being sold not having to pay stamp duty at 1%.

Average house prices in Stoke-on-Trent range from £83,000 for a terrace house to £178,000 for a detached house.  Whilst properties under the old £125,000 stamp duty land tax threshold did not attract the tax, many thousands of the properties in the area will now fall within these limits and the area will benefit hugely from this assistance. 

With over 600 properties currently listed for sale in Stoke between these price limits, buyers can make significant savings following this announcement if they act quickly.   People considering moving house are likely to be more motivated to place their own properties on the market which in turn will re-enforce the positive message the housing market is not in a downward spiral and that house prices will soon stabilise. 


For further information, contact Rebecca Howle at Beswicks on 01782 205 000.

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