First-time buyers are the biggest casualty of the credit crunch.
So much so that they are starting to look like an endangered species.
Just 357,800 managed to get a foothold on the property ladder last year – the lowest total since 1991.
And the numbers plunged another 30 per cent in the first two months of this year according to data from the Council of Mortgage Lenders (CML).
Understandably some would-be buyers have been spooked by the recent economic turmoil and postponed their plans.
Others are running scared in the face of mounting evidence that property prices are falling.
But many more who are still keen to buy are being priced out of the market by banks pushing up mortgage rates and insisting on larger deposits.
The banks have persuaded Gordon Brown to help ease their cashflow crisis by swapping some of their mortgage assets for government bonds.
While it is clear that urgent action is vital to lubricate the money markets, I’ve strong reservations about ministers willingness to write a blank cheque with taxpayers’ money, particularly when the value of the banks’ mortgage assets is falling almost daily.
But there is something else the PM could do to help first-time buyers whose purchases are vital to prevent the property market seizing up.
He could make a simple, but significant change to the way stamp duty is levied.
You’ll notice I’m not suggesting scrapping it. Stamp duty raised £6.4 billion for the Treasury in the 2006/07 tax year – up from £675 million when Labour came to power in 1997. That means it has become too rich a source of revenue for Mr Brown to forgo.
What I am advocating is a far cheaper alternative – simply switching the burden of the tax from buyers to sellers.
This would remove a huge obstacle in the path of ALL first-time buyers at a stroke.
It would also go down well with most vendors. Most people trade up to more expensive homes when they move. If the tax was levied on the house they were selling their bill would be smaller.
Of course, it is not a perfect system. Some older people trading down would pay more but they can probably afford it.
This simple step would lift the one per cent tax burden from first-timers at a stroke.
It now costs £130,000 on average to take that first step on the property ladder. This means buyers are forced to find an extra £1,300 when the pips are already squeaking with all the expense.
What is more, spiralling house prices mean 61 per cent of first-time buyers now pay the tax, according to the CML – up from 47 per cent two years ago.
This is mainly because the government has failed to raise the threshold at which the one per cent tax kicks in as house prices have shot up.
If it had kept pace with property prices since 1997, only buyers splashing out more than £171,000 would pay it.
In the past, ministers might have opposed this idea on the grounds that vendors would simply have added the cost to the sale price.
But with the market clearly on a downward cycle there will be little opportunity for them to do that.
So come on Gordon. Don’t throw taxpayers money at the banks who’re largely to blame for the current bedlam. Adopt this subtle change and give young families the leg-up they need. It could just be the key to ending the current logjam.
By Clinton Manning