What effect will UK budget have on ailing housing sector?

No one can work out what effect if any the government's latest budget will have on the ailing housing market.

A guaranteed mortgage-backed securities revealed by the Chancellor may help, but will not oblige lenders to lend – the problem behind the market's weakness.

Otherwise the stamp duty 'holiday' for buyers paying under £175,000 (Dh945,000) for a home is likely to do little (in London such a figure is laughable – even after recent price falls, a typical flat there is more than £300,000).

The £400 million pot to help developers kick-start stalled housing schemes will last only a few hours before it is exhausted.

Although the holiday home sector is not a big factor in the wider housing market, this is the part of the budget that raised most eyebrows among analysts. It also gives us an insight into the confused thinking by the UK Government right now.

Currently, if you let out a UK holiday home you can write off losses against personal tax and defray Capital Gains Tax on the profit when you sell by purchasing another property.

The budget withdrew these benefits from 2010 and estate agents worry this will lead to fewer holiday homes being bought, and existing ones being sold.

Bizarrely, the same budget announced similar tax benefits would now start for the first time for Britons owning holiday homes abroad – whereas until now, these benefits did not exist.

Why introduce one and withdraw the other? Who knows? And perhaps most worryingly of all, no one in the government has explained.

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