Charity proposes buyer bans and Stamp Duty overhaul...

A high-profile charity is calling for a Stamp Duty overhaul, local buyer restrictions and extra charges on property purchases by landlords as it warns the housing market is frozen and requires Government action.

A new report from the Joseph Rowntree Foundation (JRF) claims the property market is facing a “worst of all worlds” situation as rising interest rates and high inflation create the conditions for a housing market freeze.

The authors Rose Grayston, Toby Lloyd and Neal Hudson describe a market where “building stops, transactions stall, cash rich investors swoop in to buy up properties, rents continue to spiral and vulnerable homeowners are stuck in unaffordable homes.”

This will have serious consequences for the economy without seeing a corresponding fall in house prices, the JRF warns.

The report claims that measures used for previous housing crashes won’t work because of the particular economic conditions today.

It urges the Government to act in a way that will not only get the market moving, but will help younger generations to own a home or find affordable places to rent.

The charity makes a range of suggestions including giving councils the ability to apply to declare housing pressure zones where they can set the rules about who can buy properties in particular areas.

The report said: “This could be used to restrict investor activity where high demand for second homes or low demand is fuelling exploitative lets.”

It also suggests enabling would-be first-time buyers to capitalise on falling prices by introducing Government-backed mortgage insurance for loans above 80% of value to increase the availability and reduce the price of first-time buyers’ mortgages as well as supporting new buyers to acquire existing homes in need of renovation.

The document rehashes the idea of replacing council tax and Stamp Duty with an annual property tax paid by the owner rather than the resident, in order to moderate future house price rises.

The charity also suggests that the extra Stamp Duty surcharge on investor purchases could at least be doubled to give an advantage to those seeking to buy a home to live in.

Darren Baxter, principal policy adviser at JRF, said: “We are facing a housing downturn that will put vulnerable families and our country’s economic prospects into serious difficulty. The Government must confront this head on and recognise that past approaches will not work this time.

“Instead, the Government must tackle both the short-term fallout from the housing downturn we find ourselves in and the deeper problems within our housing system.

“By acting now, and doing both at the same time, Government will ensure we are better placed to come out of this downturn with a fairer, more secure and more affordable housing system in reach.”