PBR 'could inject activity into the housing market'

News Category: Industry News

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Government policies on housing finance as unveiled in chancellor Alistair Darling's pre-budget report (PBR) yesterday could provide a much needed boost for the property sector, an expert has said.

Simon Rubinsohn, chief economist at Rics, welcomed the PBR's inclusion of proposals to provide guarantees on the interest and principal of residential mortgage-backed securities or covered bonds backed by lending for new housing transactions.

He said the policy was a key recommendation of Sir James Crosby's recent report on housing market finance.

"Ultimately, this move should increase funding available for new borrowers which, in turn, could inject some much-needed activity back into the housing markets," Mr Rubinsohn added.

However, State Aid approval is needed from the European commission and it is disappointing that there is no indication of a time-line in the PBR for the introduction of the measures, he noted.

Chancellor Darling hopes that the PBR's recommendation of cutting value added tax from 17.5 per cent to 15 per cent would lead to improvements in consumer spending, which would tackle the UK economy's slide into a deep recession.

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