Mortgage industry hits out at 'unnecessary' government intervention
02 December 2003
A property expert has called on the government to resist intervening in the housing market.
The Council of Mortgage Lenders' director general Michael Coogan urged the government not to give into the temptation to intervene in the current housing market boom unless it led to lower costs, major efficiency gains, practical market improvements, or an increase in sustainable home-ownership.
Speaking at the CML's annual conference, Mr Coogan said that Government intervention in the housing market was inevitable in some form, but stressed that the reasons for intervention were sometimes negative, or questionable.
As an example he cited the debate about increasing stamp duty, which, he said, was driven by the desire to increase revenue from the housing market rather than by a conviction that it would benefit the market.
In advance of the Chancellor's pre-Budget statement on December 10th, Mr Coogan pointed out that the one-off cost of bringing in mortgage and general insurance regulation is estimated by the FSA at £330 million, followed by an annual cost of £233 million.
He explained that industry estimates suggest an extra £112-£224 million a year as the cost of bringing in home condition reports as part of the Government's proposed home information packs.
Mr Coogan stated that the number of home-buyers paying stamp duty in 2003 will be half a million higher than it would have been if the Government had uprated the threshold since 1997 and added that over £1 billion of assistance to home-owners through tax credits is not claimed.
Mr Coogan commented: "It must be tempting for any Government to see the housing market as a cash-cow. But the reality is that homeowners are disadvantaged in terms of subsidy and benefits compared to tenants, despite the fact that home-ownership is no longer the tenure of privilege. If anything, there is an argument to be made that Government should provide more subsidy to home-owners, not less.
"Home-ownership is a hugely efficient tenure to which the vast majority of people aspire. As a spin-off benefit, housing wealth acquired through home-ownership directly helps to reduce social inequality and increase personal responsibility and self-sufficiency."