Housing market needs a HIP replacement

I said a few weeks ago that the Government didn’t seem to have cottoned on to the seriousness of the problems in the housing market, with a review of the way mortgages work being the nearest thing to action in March’s Budget.
The market wasn’t exactly rip-roaring along even then. If anything, it’s got worse since.
There are fewer mortgages at higher rates, buyers pulling out of deals, and housebuilders halting work on sites while they try to shift the properties they’ve already built.
In places, residential property sales are down more than 40%. So a review of the mortgage market that won’t report until later in the year is, shall we say, a little less urgent than it might be.
What could the Government do? Ditch those abysmal Home Information Packs, which lumber sellers with an upfront cost of several hundred quid and, in the words of the Consumers Association, add very little to the sale process.
All they do add is potential frustration: in current market conditions, it’s entirely feasible that some homes could take a year or more to sell. If you take your property off the market after a year and then put it on again a few months later you’ll have to pay for another HIP – one which will probably say exactly the same as the old one.
This is, plainly, bonkers, and the Government really ought to wake up to the tinpot status this half-baked process enjoys.
The bigger issue in a market like the current one is the old chestnut of stamp duty. This leaps up to 3% of the price if you buy a house for more than £250,000, and in a standstill market it almost certainly means one of two things for people selling in the £250-280,000 bracket: accepting bids below £250,000 or paying the stamp themselves.
That’s the small matter of £7,800 on a £260,000 house.
A cash-strapped Government seems unlikely to scrap the duty, but it might win a few friends by reducing the rate, allowing people to pay in instalments or pay later.
My take is that even if the Government does nothing there will be a significant drop in Stamp Duty revenue this year, especially from deals that would have been immediately above that £250k threshold. So why not acknowledge reality and give the property market a fillip?
It hasn’t done enough for first-time buyers, either. There was talk of measures to help first timers working in key professions like nursing, but what about the army of strugglers that form the majority?
The housing market isn’t dead. All the froth of buy-to-let and sell-to-profit has gone out of it, but the mainstream market will pick up slowly as the credit crunch fuss dies down. Despite all the headlines you can still get a mortgage.
But even if all the Government wanted to do was repair its own battered finances then it could take some decisive action to help it pick up faster.