Measures for housing market planned
Updated on 31 August 2008
The Government will try to put its recent problems behind it this week when it unveils a package of measures to help struggling homeowners and first-time buyers.
It is expected to launch a number of initiatives on Tuesday ranging from improved support for people facing repossession to new savings plans and shared equity schemes for those trying to get on to the property ladder.
The announcement, which follows rumours of tensions between Number 10 and the Treasury, will be made as a joint statement from Prime Minister Gordon Brown, Chancellor Alistair Darling and Secretary of State for Community and Local Government Hazel Blears.
Measures to help existing homeowners who are struggling with repossession are expected to be at the heart of the package.
The Government is understood to have been working with trade body the Council of Mortgage Lenders to ensure that repossession is only ever a last resort once everything else has failed, and to make sure that people struggling to pay their mortgage are treated fairly.
But it is also expected to announce moves enabling housing associations to purchase unsold homes on the open market in a bid to boost the social housing stock, as well as an expansion of the Government's shared equity schemes, under which buyers purchase only an affordable percentage of their home.
Other expected measures include an initiative to help people trying to get on to the property ladder save for a deposit, such as a doubling of the tax-free cash ISA allowance to £7,200 for first-time buyers, or creating a new regular saving scheme with similar tax benefits for this group.
It is currently critical for buyers to have a large deposit as lenders reduce the loan to value ratios they are prepared to advance as a result of falling house prices and a shortage of funds due to the credit crunch.
There are now just two 100% mortgage deals available, while the number of 95% loans has been cut drastically, with most lenders demanding borrowers put down a deposit of at least 10%.
This week's statement is also expected to provide some clarity on the Government's intentions for stamp duty.
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