Pre-Budget report disappoints housing market

The government announced plans to double the number of Britons able to qualify to buy a home using shared equity schemes in its pre-Budget report yesterday.

This would see the number of shared equity buyers helped onto the housing ladder through special rate and zero deposit mortgages go up from 80,000 to 160,000 in the next four years.

Chancellor Gordon Brown also said the number of new homes built on surplus land would rise to 130,000.

However, the pre-Budget report's failure to address some key issues facing buyers and sellers has been widely criticised by much of the housing industry.

The Royal Institution of Chartered Surveyors (Rics), the National Association of Estate Agents (NAEA), the National Housing Federation, and property portals have all voiced their disappointment at the government not doing more.

Key areas where the housing market hoped for reform were raising the stamp duty threshold and greater investment in new homes.

"Government ambitions for house building released in the pre-Budget report show that they still do not grasp the level that is necessary," said David Stubbs, Rics senior economist.

He added the increase in new homes "does nothing to address the backlog of housing demand that has been built up due to persistent undersupply in the past 15 years."

The National Housing Federation was also highly critical of the government's lack of ambition in housing supply.

"Shared equity schemes alone will not end the housing misery of millions of people on moderate and low incomes," said David Orr, National Housing Federation chief executive.

However, the widening of the shared equity scheme was largely welcomed by the housing market.

The widest criticisms were voiced at the failure to raise stamp duty in line with house price inflation.

Halifax, the country's biggest mortgage lender, and the NAEA both said the failure to reform the tax was disappointing.

"It is unfortunately yet another missed opportunity by Gordon Brown to increase the stamp duty thresholds across the housing market, in order to bring it inline with house price inflation," commented Charles Smailes, NAEA president.

Henry Pryor, founder of property portal Primemove.com went further, saying a failure to raise stamp duty will result in "serious consequences for the market, effectively grinding it to a halt".