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Balls calls for innovation to kick start housing market

In an impassioned speech to the labour party conference in Manchester this week (1 October), Ed Balls, the Shadow Chancellor, called for the building of 100,000 new affordable homes and a further Stamp Duty holiday for first time buyers in an effort to re-energise a UK residential property market which continues to stutter and stall.

Balls called for innovation and action, suggesting that proceeds from the imminent sale of the 4G radio frequency spectrum (the 4G spectrum is to be parcelled and auctioned to mobile telephone providers and could raise up to £4billion for the public purse) could be used to build affordable homes for rent and for sale, boosting the flailing property market and creating thousands of jobs in the construction industry.

This seems to be a neat idea but it will only work if mortgage lenders are prepared to loosen lending criteria to such a degree that first time buyers can borrow enough money without needing to save an unrealistically high deposit – or rely on the “Bank of Mum & Dad”. There needs to be some joined up thinking as one will not work without the other.

Whilst a further Stamp Duty holiday is hardly a new concept, scrapping the tax for first time buyers buying at £250,000 or less would certainly make a difference (buyers currently pay 1% of the purchase price in tax for properties bought over £125,000 and up to £250,000). Mr Balls suggested a 2 year period would be needed and I see this as a minimum to have the desired impact.

Whether these ideas can be classed as election promises or not, it at least shows that the Shadow Chancellor recognises the seriousness of the current problems and how confidence in the property market in this country is vital to the nation’s economic stability and future growth.