BSA comments on Budget 2011

BSA comments on Budget 2011

BSA comments on Budget 2011

Commenting on the measures announced by the Chancellor in today’s Budget, Adrian Coles, Director-General of the Building Societies Association (BSA), said:

First-time buyers and Stamp Duty
“The Government’s announcement today of a shared-equity scheme to support first-time buyers and encourage house building represents a small, but important, step. It is, however, no panacea and take-up is likely to be lower due to it being limited to newly built properties. There are existing shared-ownership and shared-equity schemes which offer new homeowners affordable ways of purchasing their first home. It may have been more sensible for the Government to commit to more investment in the existing schemes.

“It is also not clear how this new scheme will fit with the FSA’s Mortgage Market Review proposals on affordability, as it includes an additional loan that could result in lenders having to grant a lower mortgage than the borrower requires.

“We look forward to the outcomes of the Government’s review of Stamp Duty for first-time buyers in the Autumn. However, the Government should address the overall fundamental flaws of Stamp Duty. The current ‘slab’ system results in the bunching of transactions at prices just below the thresholds. It’s time Stamp Duty in its entirety was reformed.”

NS&I funding target 2011/12
“It is disappointing that NS&I have not been set a zero funding target for 2011/12 – we fear this will distort the savings market, which remains much smaller than it was prior to the credit crunch years. NS&I enjoys backing by HM Treasury which places it at an advantage compared to others in the market. A distorted savings market could have negative implications for the housing market, if deposit takers find raising funds for lending more challenging.”

Support for Mortgage Interest (SMI)
“The 12 month extension of the temporary changes to the eligibility criteria for SMI is a sensible one. SMI provides an effective alternative to other Government support for struggling homeowners.

“However, we believe an overhaul of SMI could make a significant difference to borrowers in financial difficulty, without significantly increasing the cost to the tax-payer.”

Junior ISAs
“The BSA welcomes the Junior ISA and has been working with HM Treasury on its design. Its introduction will go some way in filling the gap left by the abolition of the Child Trust Fund and mutuals are well placed to offer such accounts.”

ISAs
“It’s a pity the Chancellor did not commit to improving ISAs for consumers. By permitting transfers from stocks and shares ISAs to the cash product, the Government would have provided more product flexibility for savers, which would represent a consistency of approach.”

~ Ends ~

Notes to Editors

1. A copy of the BSA’s 2011 Budget Submission can be viewed here www.bsa.org.uk

2. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 48 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

3. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

Rachel Wylie (née Le Brocq)
Press and Public Affairs Manager
The Building Societies Association
6th Floor, York House
23 Kingsway, London
WC2B 6UJ

Tel: 020 7520 5905
Mobile: 07773489644
Fax: 020 7240 5290
www.bsa.org.uk

Join us at the BSA Annual Conference in Birmingham, 4 & 5 May 2011
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