Mortgage rescue scheme

New relief to protect the income of homeowners who lose their jobs is to be considered by the government, the housing minister confirmed yesterday.

Caroline Flint said she was looking at a "mortgage rescue scheme" which could help people who became unemployed to keep paying the interest on their home loans.

The measure is among several ministers are to consider to reverse the slump in the housing market. With prices down by almost 11 per cent since last summer and transactions dwindling, the Treasury is investigating all the options.

The most likely include a temporary suspension of stamp duty for first-time buyers on homes of up to £250,000. The measure, which is being recommended by the property industry, is official Tory policy.

But with the public finances deteriorating, the Treasury is unlikely to have much room for a big give-away to homeowners. As a result, the measure could be deferred, with buyers having to pay the tax several years later.

The leaking of the stamp duty proposal this week angered estate agents and builders because many potential buyers might now delay purchases in the hope of saving thousands of pounds in the autumn.

"Idle government talk about possibly delaying stamp duty merely adds to the lengthening list of reasons not to buy today, and therefore not to sell today, unless you absolutely have to," said Ed Lewis, director of Savills' London new homes team. "The intention is to get the property market moving again, but just talking about it achieves the precise opposite."

Ms Flint said changes to stamp duty were one of the Treasury's options. But she warned the measure would not rescue the market on its own. "I've always said that stamp duty and removing it in itself may not kickstart the market in the way that people think it might," she said.

Ms Flint pointed out the problem was banks were offering fewer mortgages and demanding bigger deposits. "Stamp duty for the people who pay it - and many people who don't - represents a small amount of the upfront costs, so we have to look at all these issues to make sure we get it right."

The Conservatives called for an immediate scrapping of home information packs to help revive the market.

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