It’s clear from yesterday’s pre-Budget report (PBR) that the housing market is delivering some rare good news for the government - not just politically but financially too.
The political good news has been clear for some time. There may still be 48,000 repossessions this year but that means the rate at which people are losing their homes is around half that seen in the depths of the last housing market crash in the early 1990s.
That’s a stat you can expect to hear over and over again as the government hammers home the point that it acted when the Tories did not. ‘In the early 1990s, hundreds of thousands of families lost their homes,’ Alistair Darling said yesterday. ‘I did not want to see this repeated.’
The financial good news is more unexpected but it’s the direct result of the recovery in the housing market over the last six months. The fine print of the PBR shows that the Treasury now expects its take from stamp duty this year to be £2.5bn higher than it forecast in the Budget in April. The forecast for 2010/11 is £2.6bn higher. And it’s not just stamp duty - the Treasury also gains from increased inheritance tax and VAT on housing-related consumption.
Some stamp duty comes from share transactions but the lion’s share of it comes from home sales. The total take will still be around half what it was before the crash but with financial pressures all around it’s a welcome boost.
Up to £5bn over the next two years really does put the cost of all the support measures into perspective. While the stamp duty holiday, low interest rates and homebuy direct have had a direct impact, there have also been far fewer distressed sales thanks to those lower repossessions.
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