John Wriglesworth

The chancellor grabbed the headlines to win positive comment and (his Labour Party colleagues must be hoping) votes, with a spring Budget that put the emphasis on giving rather than taking away.

Everyone had expected chancellor Gordon Brown to be generous in the run-up to the election but the raising of the stamp duty threshold from £60,000 to £120,000 was something of a joker in the pack.

Although it looked good in truth the decision will do little to help first-time buyers in the South-east. First-time buyers often face prices of more than six times their income for modest two-bedroom starter homes. In London less than 5% of properties sold last year cost less than £120,000.

The increase in the stamp duty threshold is a step in the right direction but it is not a solution. In the absence of more help from the government it seems that, once again, the responsibility will fall on developers to help first-time buyers on to the property ladder. Developers’ help will take the form of incentives such as payment of deposits and legal fees and mortgage subsidies.

The chancellor also had bad news as tax incentives for commercial developers to target disadvantaged areas were abandoned. This may lead to regeneration schemes in disadvantaged areas becoming unviable for housing associations and developers, and future projects that do go ahead are likely to impose higher rents on tenants.

However, the government is going some way to help the large group of people now priced out of the property market by expanding its Homebuy scheme for shared ownership. The scheme aims to help 100,000 people over the next five years to get a foot on the property ladder.

In January the ODPM cited the example of Louise Townsend, assistant manager of a residential care home in Bournemouth, who has been helped by shared ownership.

Unable to afford to buy her own property outright she used a shared ownership scheme with Bournemouth council and Western Challenge Housing Association to purchase a 50% share in a purpose-built flat in Boscombe, paying rent on the remaining 50%.

At the moment the Homebuy scheme is primarily for those who are in social housing. If it is to help more people like Louise Townsend, who have secure jobs but still cannot earn enough for a mortgage the scope of the scheme needs to be broadened. It needs to be widened to include all first-time buyers on low incomes to make a real difference.

Developers can rise to the challenge and help the first-time buyer. They can add to the incentives they offer by running their own shared-ownership schemes where they effectively offer the purchaser an interest-free loan.

Or they could build homes that fit into the £120,000 price bracket, just as they are looking at ways of hitting the £60,000 build cost target set by the government.

Either way, the challenge remains, as the chancellor’s great giveaway turned out to be little more than sleight of hand for buyers in the South.

John Wriglesworth is a housing market economist for property database company Hometrack