The Chancellor, Alistair Darling has been called upon by the National Association of Estate Agents (NAEA), to further aid the housing market recovery and avoid sending Britain into a ‘W’ shaped recession.
In a submission delivered to Downing Street, the NAEA calls on Mr Darling to:

• Immediately extend the current stamp duty holiday
• Conduct a longer-term review into the function of Stamp Duty
• Intervene in the mortgage markets to encourage banks to lend again
• Improve access to finance for first time buyers
• Suspend Home Information Packs

 Peter Bolton King, chief executive of the NAEA stated:

“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“It is clear that Stamp Duty is an outdated and unpopular tax that is out of date and out of place in today’s world.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.”

“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 25% 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.”

“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  High loan-to-value mortgages are being withdrawn and the consequent rise in the amount being demanded in deposit means it is becoming increasingly difficult to gain a foothold on the housing ladder.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.”

“The NAEA calls on the Government, once again, to suspend Home Information Packs.  The cost of the packs punishes sellers, while more than three quarters of buyers – 77% – do not consider them before they decide whether to buy a property.

During a recession this is an unacceptable situation.  The NAEA calls on the Government to immediately suspend HIPs while the UK economy is in recession, and to commit to re-examining their viability once the economy is out of recession.”

The Bank of England (BoE) has maintained interest rates at 0.5% for the eighth consecutive month.

As expected the Bank of England’s Monetary Policy Committee has voted to keep the base rate on hold at 0.5% where it has been since March this year.

Many commentators expect the rate to remain at this level until well into next year, with one even predicting rates will stay at this level for another five years.

The Bank of England also said that it was continuing with it’s £175 billion of quantitative easing, which it expected to take another month to complete.

Today (06/10/09) the annual ISA limit has increased from £7,200 to £10,200 for people who are currently aged 50 and over, or who will be 50 before 5th April 2010. Younger savers will have to wait until the 2010/11 tax year to benefit from the increased limit.

In his Budget speech earlier this year the Chancellor, Alistair Darling announced the increase in the limits. Eligible savers will be able to invest £1,500 of the increased allowance in a cash ISA and £1,500 in an Equity ISA.

In the last month numerous providers have been offering savers increased ISA rates, to those that will be able to take advantage of the increased limit from today.

Those savers who have already invested this year’s allowance in a variable rate cash ISA should have no problems making the additional top-up. However, those who have taken out an existing fixed rate ISA this tax year should check with their provider to see if they will accept the additional money to be invested. Those wishing to take advantage of the increased allowance should act fast before the end of the tax year.

Contact 1 STOP Financial Services, who will help you look at the different options available to ensure you make the most of your tax free allowances.

Land Registry data for August shows a monthly house price change of -0.1%. This gives an annual decrease of -9.4% , which shows a marked improvment form -16.3% in February. The average house price in England and Wales is £155,968.

Property transactions averaged 41,911 sales per month during the months from March to June 2009. In the same period in 2008, the average was 60,997 sales per month.

London and the West Midlands experienced the greatest monthly price rise with a movement of 0.8%. The average property price in the capital is now £310,640. All regions experienced a decrease in their average property values over the last 12 months. The region with the most significant annual price fall was the North West with a movement of -12.7%. Hartlepool experienced the greatest annual price fall with a drop of 23.7%.

The most up-to-date figures available show that during June 2009 the number of completed house sales in England and Wales fell by 17% to 48,903 from 58,636 in June 2008, monthly sales in England and Wales have risen steadily during the first half of the year – up from 26,517 in January.

Just 5 per cent of those aged 50 plus know what the new Isa limits being introduced on 6 October 2009 will be, according to a Saga study.

Isa limits are being increased to £10,200 for those aged 50 plus from next month but research conducted by Saga showed 54 per cent have no idea what the new limits will be.

A further two fifths (41 per cent) know the limit is increasing but did not know by how much.

But the research did highlight two fifths (39 per cent) are keen to top up their Isas following the change.

Andrew Goodsell, chief executive of Saga Group, said: “Having access to a larger tax free savings and investment allowance will help the over 50s plan their retirement income more efficiently and we do urge people to look out for competitive rates to ensure they invest their money wisely.”

At 1 Stop Financial Services we can help people look at their allownaces and make sure they are making the most of the changes in the ISA limits.

According to Rightmove’s September House Price Index, the average asking prices for property is rising and the market is seeing its lowest stock levels for 18 months, with 10 properties coming off the market for every 8 coming on.
The onset of the Autumn moving season sees new sellers asking an average 0.6% more for their properties. Rightmove has also recorded the lowest average stock levels per branch for 18 months, with 29% more properties coming off the market than coming to the market. The lack of choice in popular areas and high deposit requirements are combining to deter existing home owners from taking advantage of more buoyant market conditions to trade up.

Miles Shipside, commercial director of Rightmove, comments: “There’s an Autumn window for new sellers where a sensible asking price combined with this better market could get you traded up into your next home before Christmas. Some would-be sellers may be concerned by the limited choice of suitable property currently available, and will have to decide whether to take a chance on finding something fresh to the market after they have found a buyer.

This increases the risk and stress of moving, but with choice getting increasingly limited in popular areas they need to have a buyer lined up to improve their chances of securing their next home”.

The brisker market continues to erode stock levels as sold or withdrawn property is removed from the, market. One agent’s summary of trading conditions in August was: “Sales awesome, new listings dreadful”.

New seller numbers are averaging around 23,000 a week, giving a run rate of around 1.2 million a year. Historic figures from Rightmove show that potential buyers have previously enjoyed a choice from around 2 million properties a year. With 151,591 properties measured as coming off the market this month, it is easy to see why property scarcity in popular areas is underpinning price levels.

Home buyers are in danger of missing the stamp duty holiday deadline which expires at the end of the year

As part of the Government’s economic stimulus package, properties valued between £125,000 and £175,000 have been exempt from stamp duty since September 2008. This will come to a close at the end of the year, meaning home buyers will once again face a 1% tax on all properties valued between £125,000 and £175,000.

Buyers at this property price range would normally face a stamp duty tax bill of anywhere between £1,250 and £1,750.

On average, house purchases take at least three months to complete, so to ensure that you don’t pay stamp duty this means the effective deadline for mortgage applications will be 30^th September.

The stamp duty holiday has been a great support in stimulating the housing market, and has significantly reduced costs of house purchases for houses up to £175,000 in value. However, with the holiday coming to an end, anyone looking to buy a property worth more than £125,000 faces a sizeable tax bill if they fail to complete before 31 December 2009.

With a saving of up to £1,750 at stake for those people who have been considering buying a property, this impending deadline is an added incentive to move fast. First time buyers have been hit hard by the costs of climbing on to the ladder and for these people this is a golden opportunity to make a big saving.

The latest figures from Land Registry show a July increase of 1.7% in all regions in their average property values.

The July increase in England and Wales is the strongest monthly growth since July 2004 and the third month in a row with a positive movement. The annual drop of 11.7 per cent takes the average house price to £155,885.

Wales experienced the greatest monthly rise with a movement of 3.1 per cent and an average property value of £123,122.

The Consumer Prices Index annual inflation report for July remains the same as June at 1.8 per cent.

 
Food and non-alcoholic beverages gave the largest downward pressure affecting the change in the CPI annual rate. This was principally due to meat and vegetable prices falling this year but rising a year ago across a range of products. There was a small downward effect from bread and cereals, where prices rose by less than a year ago.

There was also a large downward pressure from restaurants and hotels where prices rose by less than a year ago. This downward effect came from restaurants and cafes, particularly relating to take-away items, and accommodation services, where prices were little changed this year but rose a year ago.

The only large upward pressure affecting the change in the CPI annual rate came from recreation and culture. The effect came mainly from games, toys and hobbies and, to a lesser extent, from recording media, with prices of computer games and pre-recorded DVDs rising this year but falling a year ago. Partially offsetting these effects was a small downward contribution from photographic equipment where prices fell by more than a year ago.

RPI annual inflation was – 1.4 per cent in July, that is a fall of 1.4 per cent on the year, compared with -1.6 per cent in June. The main factors affecting the CPI also affected the RPI. Additionally, there was an upward pressure from housing with the largest effect coming from house depreciation. Depreciation is excluded from the CPI.