So Gordon Brown's housing package designed to kick start the housing market is finally here.
It consists of
1 - Stamp duty holiday for 1 year for properties valued at under £175,000
2 - A shared equity scheme for first time buyers to get in the ladder
3 - General help for those facing repossession.
Concentrating on points 1 and 2
Point 1 Stamp Duty - Welcome help for those looking to buy under £175,000. Does not help a housing chain complete as all others in the chain going up will still be paying full stamp duty. Does not help those first time buyers that understand house prices are falling and they will be saving more than the 1% stamp duty cut if they delay purchasing.
Point 2 - An interest free loan of up to 30% for a first time buyer to buy a NEW-BUILD property. The loan will be split equally between a house builder and the government and repayments will start to be made after 5 years. Aiming to help 10,000 people get on the housing ladder. What is unclear is why a first time buyer would want to buy a house that is falling in value with a 70% mortgage and a 30% loan. Sounds like negative equity.
It is also unclear if the government will take a second charge behind the lender's first charge. If house prices fall by a further 20% and the home is repossessed does the tax payer lose money?
Will the lender take the interest payments after 5 years into their affordability calculations.
And does the government really think that helping 10,000 people buy a new-build house will solve the housing crisis?