The Royal Institution of Chartered Surveyors (RICS) have delivered a stinging attack on the coalition Government’s NewBuy mortgage scheme, suggesting it could wreck the entire housing market.
RICS are also calling for the regulation of all letting and property management agents, and the introduction of a single, UK regulation and redress scheme to be set up within 3 years.
The RICS says that NewBuy, which offers purchasers of new-build property 95% mortgages underwritten by taxpayers and developers, could reduce demand for ‘second-hand’ property and play havoc with lenders’ affordability calculations.
The RICS says that the NewBuy scheme may not even help first-time buyers when they come to buy second-hand properties because without stimulating the second-hand market as well as new-build, purchasing chains and overall transaction levels will begin to stagnate.
The institute is to include specific guidance to the valuers of new homes, to ensure that they understand the impact of NewBuy and make sure it ‘does not adversely impact the market’.
But while the RICS is calling on the Government to help local authorities introduce more Lend a Hand schemes, where buyers put down deposits of at least 5% and local authorities provide an indemnity of up to 20%, the organisation says the ‘dire state’ of local government finances makes this unlikely.
The RICS are also calling on the Government to amend the Estate Agents Act to bring all property letting and management agents within its scope, in terms of the need to have client money protection professional indemnity insurance and redress mechanisms.
The RICS says it will work with other bodies to establish by 2015 a single industry-wide regulation and independent redress scheme for the whole sector.
It also wants to see the Government encourage more investment in the private rented sector, including encouragement of ‘build to rent’ schemes, and for private tenants to be offered longer tenancies.
Elsewhere in its new housing policy, the RICS calls for VAT on all home repair, maintenance and improvement work to be cut to 5%, and for Stamp Duty to be reformed.
The RICS produced its new housing policy after consulting its members and will now lobby the Government.
Peter Bolton King, RICS global residential director, said: “To deliver real influence in the corridors of power, RICS needs to have clear residential policy. In putting this landmark work together, we met with our members and firms of all sizes from right across the country. What came across loud and clear is the desperate need to reform sections of the market and generate growth right across the UK. We will now take these recommendations to the Government with the aim of helping them to improve the residential property sector for those operating within the industry and the public as a whole. Change needs to happen if we are to see an economically viable and professionally driven residential sector, and I stand ready to work with members, government, other industry bodies and consumer organisations to achieve this.”
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