Budget bad for property

The shortage of housing is now so severe in Britain ??â??â?? with 70,000 homes being built rather than the 240,000 target ??â??â?? it could trigger another major price boom in a year or two. The shortage is also certain to fire up demand for rental properties.

If the housing market is one of the great propellants of the British economy it was given insufficient and inappropriate fuel in the Budget yesterday.

There was hardly anything in it to encourage first-time buyers. Until first-timers return to the market the private property sector will remain in the doldrums.

The extension of the so-called stamp duty holiday ??â??â?? it??â??â??s going to be re-introduced at the start of next year ??â??â?? was met with widespread derision and condemned as tokenism.

It??â??â??s likely to benefit only homeowners in areas outside London and the south east where most homes already cost more than the ??Â?175,000 cut off. Anybody trying to buy property above that figure will still face the full cost of stamp duty.

It??â??â??s estimated that only 3,500 first-time buyers will be helped by the extra ??Â?80 million which the Chancellor pledged to the HomeBuy Direct shared equity scheme.

Over 4.5 million people are on waiting lists for council homes. The figure is certain to rise to 5 million as more homes are repossessed.

Housing groups wanted at least ??Â?6bn to build 100,000 low cost homes in the next two years. But there was no sign of any type of comprehensive building strategy. Smaller amounts ??â??â?? such as the ??Â?100m being earmarked for councils to build 900 homes on town hall land for social housing to rent ??â??â?? were described as piecemeal to paltry.

With the target of building 240,000 new homes a year being missed by a spectacular mile there will be an increase in the demand for rented property. Logic demands that the inevitable consequence of this will be seen in rising rents.

landlords had been hoping for tax breaks or concessions to encourage them to stay in the market and to expand their portfolios. But there was no mention of any such scheme.

If buy-to-let landlords bail-out because rental returns hardly cover their mortgages ??â??â?? and capital appreciation is negligible ??â??â?? then the problem of providing sufficient accommodation for growing numbers of people will be exacerbated.

It was also a major disappointment to property professionals that nothing was being done to coerce lenders into offering a wider range of competitive mortgages at affordable rates, without vast deposits and free of impossibly harsh lending conditions.