Measures to make affordable housing schemes attractive to those on low incomes were announced, but Alistair Darling offered little to cheer agents, housebuilders and the many buyers not eligible for special schemes.

Plans to exempt many low-income homebuyers from stamp duty if they purchased through government shared-ownership schemes were welcomed. But observers said that higher stamp duty thresholds for all buyers would have done more to improve affordability across the housing market.

Peter Bolton King, chief executive of the National Association of Estate Agents, said: “This Government needs to realise that the housing market is slowing and the gravy train is over. He has failed the British homeowner.”

Nor was there much joy for buyers suffering from the global credit crunch. Lenders are tightening criteria for home loans as funds become harder to secure; buyers with small deposits have found themselves unable to borrow, and two thirds of 95 per cent loan-to-value products have been withdrawn in the past six months.

Rose-tinted specs fail to offer hope

The obvious justification for Mr Darling’s relatively upbeat scenario is that the outlook is fraught with uncertainty

Background

• Darling's first Budget: the main points

• The Chancellor's speech in full

• Darlings first Budget: the reaction

• Chancellor hits the home budget as his debts soar

• Need to know: Budget 2008

The Chancellor delivers a modest Budget

As so often is the case, virtue, in terms of improving public finances, is not now, but at least a year away

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While Mr Darling released a housing finance review and announced a consultation, there was little further information on a quality mark for mortgages that would be intended to allow lenders to predict more safely which loans would be at low risk of default.

Nicholas Leeming, of Propertyfinder.com, said: “Hard-pressed homeowners, in particular first-time buyers, need financial relief immediately. A probe into the possibility of more choice in long-term fixed-rate mortgage products — to be reviewed in several months — does not help people who are struggling now.”

But the Budget did offer reassurance to those eligible for the shared ownership schemes that the Government favours — and funds through the Housing Corporation. These allow for the purchase of as little as 10 per cent of a home and payment of rent for the rest through a housing association landlord.

Now buyers will be entitled to a stamp-duty exemption until they own 80 per cent of the property. Thereafter they will be required to pay stamp duty on the remaining 20 per cent. In most cases, shared-ownership buyers own less than 80 per cent.

Mr Darling also announced more generous rules for shared-equity schemes, which allow a property purchase to be made with a home loan topped up by a low-cost equity loan from a housing association or private lender. Key workers and first-time buyers will now be able to secure such equity loans for up to 50 per cent of the cost of their property, up from a maximum 25 per cent, according to Mr Darling. Such buyers will remain eligible to pay stamp duty.

The Housing Corporation announced a new shared equity scheme through The Co-operative Bank, providing an equity loan of up to 40 per cent interest-free for five years. Buyers then pay only 1.75 per cent interest for the following five years and 3.75 per cent thereafter. Another product allows an equity loan of up to 50 per cent, with interest of 1.75 per cent payable on the funds from the start.

Take-up of affordable housing has been disappointing. Shared ownership and shared equity schemes had helped 95,000 people into home ownership since 1997, the Chancellor said.

Those in the property market said that the new measures were inadequate. Adrian Coles, of the Building Societies Association, said: “We still expect demand to remain low, not least due to the problems associated with saving for a deposit.” The Chartered Institute of Housing said that the products were too complex for many and that affordability remained an issue.

Julian Thompson, of King Sturge, said that a buyer in London would need in reality to earn at least £28,000 to be eligible — and that would buy only a 25 per cent share in a one-bed flat. Yet in some boroughs, potential buyers who earn £34,000 were deemed too wealthy to be considered.

David Stubbs, senior economist at the Royal Institute of Chartered Surveyors, said: “These programmes must be expanded to accommodate a larger demand, but this can only take place when the supply of new homes has increased to match the demand from new households.”

Mr Darling also restated the Government’s commitment to its £8 billion budget for new affordable housing over the next three years. The aim is to provide an extra 70,000 such homes a year for rent or purchase by 2010-11. Housebuilders say that the number of homes being built is dropping as the market outlook worsens.

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