Help to Buy, Stamp Duty, mortgage guarantees – what will get buyers on the property ladder? David Hannah, Founder and Principal Consultant of Cornerstone Tax discusses how to restart the market post-COVID

As the property market restarts after the disruption caused by the coronavirus, many are discussing which stimuli should be initiated to help kick-start the first-time buyer market. With low-deposit mortgages almost disappearing entirely, what can help first-time buyers get on the property ladder? David Hannah, Founder and Principal Consultant of Cornerstone Tax, discusses how the government could help the market in the short and medium-term.

David Hannah of Cornerstone Tax looks at how to restart the property market

“Throughout other economic crises, stamp duty changes or relief have historically done very little to get the market moving again and there is no reason why it would help this time around either. It has been and still is a poor tool for managing market behaviour. With low-deposit mortgages almost disappearing altogether, people are having to assess their options, but there are some ways that I believe the government could help ‘first steppers’.

“To help these people get on the property ladder, government-backed purchase mortgage guarantees for borrowers would be a great way to reinstall confidence in the lending market.

“If the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties. This would give the market some security again, help buyers, and get the market moving again.

“Other stimuli such as an extension of Help to Buy would almost certainly help but reinstating 95% mortgages is almost essential in helping turn renters into buyers. Guaranteeing their borrowing for the mid-term will give lenders the confidence to bring these products back and restart the market.”

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