Parties attack each other to appease electorate |
|
|
Published
:
Mon, 25 Apr 2005 01:00
|
Sticks, stones and words are flying everywhere you look in the media in a pre-election frenzy. Labour, Conservatives and Lib Dems are digging into each other’s past and throwing mud at ach other. Plans and proposals are not spared either.
If the Tories promise to raise the threshold for stamp duty, Labour goes to town with a poster campaign reminding people how mortgage rates reached an all-time high of 15 percent in the late 1980s after the Conservatives were voted to power. And if Labour comes in a little late to announce raising stamp duty limits from £60,000 to £120,000, it is knocked down as ‘too little too late’. In any case, it would help only a tiny minority of first-time buyers.
| Labour’s posters plastered at every noticeable spot point to how rising interest rates initiated by the Conservatives had resulted in hundreds of thousands of homes being repossessed as homeowners could not meet their mortgage liabilities. The posters also provide a comparison with the low mortgage rates being offered currently (as if the low rates were their own achievement). If one were naive enough to believe the posters, one would assume there was little to worry about.
Both parties are perhaps forgetting that the electorate may have a short memory but it is certainly not naive. People realise that if the average mortgage rates have fallen from 7% in 1997 to around 4.75% currently, it has come with its own price. Under Labour, house prices have soared beyond the average couple’s reach. Thousands of potential first-time buyers are unable to buy a house as they simply cannot afford it, because of the high price and the prohibitive stamp duty.
During Labour’s terms in office, home buyers have had to fork out more and more each year, by way of stamp duty. Tax on homes worth between £250,000 and £500,000 was raised from 1% to 3%. On a house worth £500,000, one had to factor a £10,000 stamp duty added to the cost. According to an estimate, stamp duty alone added £3.7 billion to government coffers during last year.
A large number of first-time buyers resent that they had to pay the tax. The number of first-time buyers who faced paying stamp duty last month alone was three times greater than those in 1997, according to one estimate.
In 2000, Labour scrapped the mortgage interest relief at source (MIRAS) which had hurt borrowers even more. As a result, for 11 million borrowers the setback had increased by £200 a year, according to an estimate by the Council of Mortgage Lenders (CML).
The only people who are happy with soaring house prices are those who already own a home. People who bought a home in 1997 will have seen the value of their property more than double by this year.
The mortgage burden on homeowners should be eased by means such as 25-year fixed-rate home loans. Currently there are very few lenders who provide this kind of mortgage deal. The Cheshire Building Society is one such. It is possible that very few people are aware of such a credit product because very few providers are enthusiastic enough for a low-cost deals and such a long mortgage period.
Today’s electorate is a well-informed one. They want changes and know how they can get it. The current scenario in the housing market can be a turning point for both the buyer and the seller, if only the policy makers take judicious steps to steer the economy to better health.
|
|
|
|
|
|
Print this Story
