exemption of stamp tax on home purchases houses selling for less than £175,000

Yesterday Chancellor of the Exchequer Darling told the press that the slowdown in the UK is the worst in 60 years. Market News reports that “The Times speculates that UK Chancellor Alistair Darling… may be removed from office in an imminent cabinet reshuffle.” We assume the bookies are taking bets.

The government announced a £1 billion stimulus package that includes exemption of stamp tax on home purchases houses selling for less than £175,000 (from £125,000). The FT reports that it’s a feeble initiative, with only about 15,000 property transactions in May between £125,000 and £175,000, which would now be exempt from the tax. Other measures include allowing housing associations to buy homes from those facing repossession and rent them back. “Housing associations could also offer shared ownership deals where they take ownership of part of the home – reducing the occupiers’ mortgage repayments.”

“Separately, ministers announced is a new shared equity scheme called “HomeBuy Direct” where buyers can borrow up to 30 per cent of the value of a new-build home-co-funded jointly by the government and developer. The loan will be interest-free for five years.” The PM may also roll out a plan to help homeowners with energy costs.

Yesterday, mortgage approvals dropped to the lowest level in nine years. The number of UK mortgages approved in July hit a new record low, 33,000 in July from 35,000 in June, for the 12th consecutive monthly decline. Hometrack reported August house prices down 0.9 m/m and 5.3% y/y for the 11th months and the longest serie since data was started in 2001. Nationwide had a bigger number last week.