James Caan Marketing Ploy May Have Small Impact on Housing Market

The star of Dragons Den James Caan has launched a new scheme to provide short-term interest free loans to homebuyers, to help them cover fees like solicitors fees and stamp duty.

The £1BN fund for the scheme is being stumped up by Hitachi finance, and people get the loans through selected estate agents who are registered and advertising their properties on the portal look4aproperty.com, which Caan recently bought a stake in.

The scheme is a marketing ploy according to director of private property sales portal Zungalow.com, he said:

"James Caan does not care about stimulating a recovery in the UK housing market. He cares about making money. That is not a criticism; I am simply saying that we shouldn't expect this fund to bring recovery in the housing market, though it will likely do wonders to look4aproperty.com's bottom line."

The loans are undoubtedly a marketing ploy, to get new agents to sign up with look4aproperty and to generate publicity for the company. I was sceptical as to whether or not it would boost the property market, but having given it some further thought, I think it may have a small impact.

I have written previously in response to calls for the government to scrap stamp duty, that a nominal charge of 1-3% would not be an obstacle to people buying property, using the fact that stamp duty was in place throughout the last property boom as proof positive.

But now, when people have to find major deposits to get a decent mortgage, then the extra £1,750 minimum on top of things like solicitors fees may well be a bridge too far during a recession. For that reason the scheme may well have small impact on the property market.

I say small, because the £1billion fund would cover the costs of 333,333 home purchases, if the cost of every one was £3000. Considering the loans go up to £50,000 then it is likely that the fund will cover a lot fewer purchases than that. Hardly enough to stimulate a recovery, but kudos to Caan for generating hype, there is little doubt that it will have the desired effect on Look4aproperty's number of registered agents and therefore revenue.