A good idea stamped on by stamp duty

Headnote

A new method of financing home ownership has failed to get offthe ground - unreasonably - because of punishing stamp duty rules

Picture this:

* An individual who has a deposit of 5%-15% is given the opportunity to buy their home where they may be refused a mortgage or may not want a mortgage. It would mimic the government-backed shared-ownership model.

* A dwelling would be bought by the individual and a fund in proportion to the amounts they contribute to the price (so 5%-15% for the individual and 95%-85% by the fund).

* The individual would pay the fund an amount each month in return for living in the property.

* The individual would have the right (but not the obligation) to buy additional amounts of equity in the home ("staircasing"), which, if taken up, would reduce the amount to pay each month.

* Individuals would be helped to obtain a home on a secure, long-term basis while being given the financial flexibility to buy part now and the rest when they are ready. It would therefore be a different product from renting or buying.

* The individual would be able to sell their stake at any time. So they would be protected from significant loss as it is very unlikely that there would be, say, a 20% reduction in property prices. In contrast to mortgages, the individual would have no risk of negative equity as he would have no obligation...