The Pre-Budget Report (PBR) issued by chancellor Alistair Darling this week will not transform today's housing market but will at least give it more of a fighting chance.
This is the view of Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle.
Overall, there were a raft of small measures in the PBR, such as the temporary reduction in VAT, that will help domestic balance sheets. However, the impact of these announcements is only likely to be marginal, leaving a little more room to fund mortgage repayments and help stave-off further repossessions and arrears.
Jones Lang LaSalle believes the three month grace period being granted to homeowners facing repossession will be of comfort for some property owners but it will also benefit the wider marketplace.
This action will cause a delay in repossessions and should reduce the total number as some will escape repossession altogether.
Additionally, the negative impact of repossessions on the housing market will be diminished and the overall number of properties on the market should also be lower as a result.
The Council of Mortgage Lenders (CML) said in principle it welcomed and supported a standard three-month period of negotiation before lenders begin court proceedings for repossession.
However, the detail will be important, as it may postpone rather than change a lender's decision to seek possession. Supporting the income of households in difficulty is just as important, which is why the CML supports the further modest improvements to the Income Support for Mortgage Interest scheme.
The CML believes further support through this scheme will be necessary and should be included in the 2009 Budget, if it is to address the increasing number of borrowers who may lose their jobs in 2009.
CML director general Michael Coogan said: “Everything announced [by Darling] is helpful, if modest. But it is vital to recognise that not all lenders are the same, and not all have received support from the Government's interventions in what remains a very difficult financial and economic environment.
“This has a direct bearing on the extent to which they are able to deliver the Government's multiple aspirations to increase the flow of new lending, be more lenient to borrowers in arrears, and improve their individual capital position”.
