I was very interested to hear the Shadow Chancellor’s speech at the recent Labour party conference where he announced that if he was Chancellor now he would increase capital spending by 3 billion pounds to build more housing and give a Stamp Duty break to first time buyers. I am delighted by this announcement as it confirms that housing is once again at the heart of the debate of economic policy. While I agree with Ed Balls that more stimuli needs to be given to the construction industry, I am not convinced that Stamp Duty breaks for first time buyers is an effective tool.
I think that the Government should do more to underwrite first time buyers’ deposits to make it easier for them to take their first step onto the housing ladder. This would have an immediate impact of stabilising the housing market, increasing lender confidence and thus increase the amount of bank lending directly to residential developments. This will encourage the construction industry to start building and, coupled with some tax breaks and an increase in the number of low-cost and affordable housing being created, would get the property market moving and with it the rest of the economy. So although I am glad that housing is now at the centre of the debate I think Ed Balls’ plan could be tweaked so that the 3 billion pounds of increased capital spending could be leveraged to have more of an impact on the housing market. I will report further announcements.Lindsay Darroch Partner & Head of Property