Gordon Brown’s last budget has not gone far enough to help struggling first-time buyers or those facing large inheritance tax (IHT) bills, industry experts said today.

The nil-rate threshold for stamp duty remained unchanged at £125,000, despite speculation that it would rise to £150,000.

The move to increase the IHT threshold to £350,000 by 2010 was seen as insufficient in the face of average house prices rises of 199% since 1995. According to Halifax figures this is more than double the rise in the IHT allowance.

Nicholas Leeming, director of propertyfinder.com said: “High house prices are making it much harder for younger generations to get on the housing ladder. As the Chancellor takes housing wealth from older generations when they die, less money is available through inheritance to help the finances of the younger groups. First-time buyers will therefore suffer too.”

Two thirds of first-time buyers with mortgages currently pay stamp duty. High house price inflation has seen a rise in the number of homebuyers caught by the duty. In the past year alone property values have risen by 11%, according to Alliance and Leicester.

Increasing numbers of first-time buyers are resorting to hand-outs or loans from their parents as their finances become more squeezed. In addition to a large deposit, first-time buyers must stump up a further £1,510 to cover stamp duty on the average £151,030 cost of a first home. Almost a fifth of first-time buyers’ income is spent on mortgage interest payments. Rising interest rates and utility charges will further stretch this financially burdened group.

News that the Secretary for Communities will launch the first stage of a new shared equity competition is widely considered inadequate in helping the plight of those hoping to buy their first home.

Stephen Leonard, director of mortgages at Alliance and Leicester, said: “First-time buyers are a vital part of the housing market, and the Government should be doing everything it can to encourage more people to become homeowners.”

Nationwide called for the Government to raise stamp duty in line with house-price inflation. Had the stamp duty threshold risen at the same rate as house-price inflation since 1993, it would now stand at £206,000, according to Nationwide.

Experts were sceptical of the Government’s move to make carbon-neutral homes under £500,000 free from stamp duty until 2012. According to SmartNewHomes.com, there are only 27 zero carbon homes in the UK.

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