Paul Smith, chief executive of Spicerhaart, has called for the return of 100% mortgages and sweeping cuts in Stamp Duty Land Tax including an exemption for first-time buyers – warning that there will be a brain drain from London if there is not drastic action.
In a full page interview yesterday with the Mail on Sunday, Smith said: “The Government is not listening because it has become so dependent on the income from stamp duty.”
He called not just for the scrapping of the tax for first-time buyers, but for cuts in Stamp Duty across the board.
“Home ownership is at a 30-year low and the market has slowed significantly since the Government’s Stamp Duty reforms were introduced. The next Budget is the right time to look again at this tax and tackle our home ownership crisis.
“First-time buyers should not have to pay anything. They are already trying to build up a large deposit. It is simply unfair to force people to this when they are trying to get on the housing ladder.”
Smith argued that 100% mortgages would not equate to risky lending because young professionals have already been paying high rents and mortgage repayments would often work out less.
He said: “If you have people who have been paying rent for years, then why should they have to find a big deposit?
“Deposits on 95% mortgages on the average home are about £14,000 and £25,000 in London. Where are first-time buyers supposed to get that money when rents are so high?
“We’re in danger of seeing the Millennial generation leave London in a mass exodus, causing a brain drain out of the capital as they move away to fulfil their desire to own their own home.”
He went on: “Would-be first-time buyers are trapped. Rents are too high nationwide and in London they are 41% higher than in the rest of the country. Hundred per cent mortgages should be available to those who have a successful track record of paying such rents.
“If you take a property worth £200,000, that may cost about £900 a month in rent. On a 95% mortgage and assuming a 3.58 per cent interest rate, the repayments would be about £800 a month.
“It’s about responsible lending to those with a proven ability to pay rent, but who lack equity due to their housing situation.”
In the same interview, Smith also revealed that he has been lobbying MPs for the last ten years to have licensing introduced for estate agents: “We are the only developed country in the world that does not license estate agents.
“You could walk out of prison and set up as an estate agent.”
Smith also revealed that he is looking at making acquisitions that would take Spicerhaart further into the north.