Falling property prices leaves £5bn black hole for The Treasury on 100 Mortgages

The HM Treasury are in an awkward situation as they are facing a £5bn black hole in their finances, this is a result due to the falling property prices. This news is not official; this report comes from the Liberal Democrats. So why would falling property prices cause a £5bn black hole for The Treasury, well as house prices are down this means that there is less stamp duty to pay, this could lead to serious repercussions for the UK’s economy.

However; The Liberal Democrats are blaming the government for the current situation, they said that they allowed for Britain’s housing boom to go too far, and now we all have to face the consequences. Liberal Democrat Treasury Spokesman, Lord Oakeshott, has said “Gordon Brown let Britain’s house party get out of control. Now Alistair Darling has been left with a £5bn Stamp Duty hangover.”

He also added “The Chancellor had hardly sat down on Budget Day before the housing market fell off a cliff in early April.” The Lib Dems has forecast that the Government’s revenues will fall by at least £5.2bn in 2008; this has been based on projections that property prices will fall by at least 15% as well as transactions falling by 50%. If we was to be a little more optimistic about the projection of house prices and said that they would only fall by 10% as well as transaction volumes dropping 40%, then the Treasury would still face a shortfall of £4bn. Oakeshott has said that Britain could now be facing a mortgage faming.

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