Industry Body says that Chancellor Jeremy Hunt “missed an opportunity” to assist potential homebuyers as the subject of housing and stamp duty were ignored in last week’s budget.
In the last eight years, the Government has attempted to help home buyers with deposit assistance schemes such as Help to Buy and Stamp duty reprieves. However, these are often temporary, as Help to Buy ends this month. Even the Government’s data shows that the initiative has assisted well over 300,000 homebuyers, but this represents less than the equivalent of one year’s first-time buyers’ purchases.
The Homeownership Funding Association (HFA) has said that offering alternative homeownership financing is a credible solution to the current homeownership crisis. These solutions take inspiration from the private sector, from institutional funding and require no taxpayer subsidy or government guarantee. Various models, such as Gradual Homeownership or Rent to Own, can assist potential buyers with providing a home that they part-rent and part-buy.
A quote featured in Today’s Conveyancer from the Chairman of the Homeownership Funding Association, Nigel Purves, said:
“As home purchase has become more and more complicated in recent years, the private sector has responded with innovation that now assists would-be buyers onto the property ladder without recourse to the taxpayer.
However, the growing gap in UK homeownership that our members are solving is hampered by stamp duty legislation that still needs to catch up with our solution. It would seem churlish for the Chancellor to ignore our plea for change regarding genuine first-time buyers being helped to buy and in numbers that would represent a significant uplift in UK homeownership.”
An alternative funding approach could increase the UK’s homeownership by over 30,000 annually. Adding 9% to the current annual numbers of homeowners nationally.
However, the HFA has said these models are ‘Alternative funding types’ and are often treated as ‘multiple purchases’ rather than a purchase by a first-time buyer. This means each first-time buyer loses their stamp duty relief and is subject to a 3% Government surcharge. Buyers also lose their ability to have a LISA (Lifetime Independent Savings Account) towards a property deposit.
The solution is to amend the definition of a financial institution to include private sector providers. The HSA has called on Jeremy Hunt to enter a dialogue with them, so they can encourage him to act in what would be an easy win for him amongst potential young homeowners and their families.