Eight out of ten first time buyers are set to pay no stamp duty at all after the chancellor outlined key changes in his Autumn Budget.
Philip Hammond’s announcement has been met with mixed responses from industry experts over his plans to axe stamp duty for first time buyers on properties up the value of £300,000. For properties up to the value of £500,000, no stamp duty will be paid on the first £300,000
Before the announcement, first-time buyers would be expected to fork out thousands of pounds in tax, but chancellor Philip Hammond has said the new initiative will see 95% of first time buyers seeing a significant reduction, with 80% paying nothing at all.
Although the news has been welcomed as a step in the right direction, many have criticised it saying it is just a drop in the ocean when it comes to affordable home ownership.
With questions over the availability on new-build homes, industry experts claim the move will ultimately increase house prices.
Mark Homer of Progressive Property said: “Stamp duty for first time buyers on purchases up to £300k has been brought down to 0% for purchases creating a saving of £5000 and reduced on purchases up to £500k. This is likely to provide some marginal help to buyers but the reality is that it is likely to push house prices higher as this drop will likely quickly be taken by the developer in Help To Buy schemes in the form of high sale prices.”
However, others pointed to Hammond’s pledge of £44bn to provide 300,000 new homes a year, saying the government needed to fulfil its promise.
Craig Vile, Director of The ValPal Network, a network of over 4100 agents, said: “Finally some joined up thinking from the Government. The abolishment of stamp duty today for first-time buyers on properties up to £300,000 is a fantastic boost to the housing market alongside the recent announcement that the Help to Buy scheme will be getting a financial boost to the tune of £10 billion.
“However, there is still a significant supply and demand imbalance of housing in this country and while abolishing stamp duty has the ‘wow factor’ and will have a big impact on first time buyers, it does not tackle the long-term fundamental issues faced by the UK housing market. The Government needs to deliver on its commitment today to support infrastructure to the housing industry and deliver on the 300,000 new homes a year that it is promising.”
Although up to 80% of first-time buyers will now be exempt from the tax, many argue that this relief will do little for the people who really need it: people living in high-cost areas such as London.
Henry Fordham, from Bellis Homes, said: “We are pleased to see widespread reform and investment in the UK housing market. Although abolishing stamp duty for first time buyers is a positive step, it being limited to £300,000 means its impact is minimised in many areas where many young professionals are required to work and live, such as London and linked commuting areas. I feel the Chancellor should have committed to his consideration of a temporary stamp duty holiday. Such a measure would of ensured the most immediate catalyst across the market and country as a whole to the benefit of the economy."
However Matt Stevens, director at The Mortgage Genie, believes this is fantastic news for first-time buyers, and is encouraging people to take advantage of the decision.
He said: “Last month, Theresa May pledged the government would address many of the issues faced by the young and first time buyers. Today, the announcement of the Autumn Budget went a long way towards fixing the market for those people, with a major reform of Stamp Duty Land Tax. Thanks to the removal of Stamp Duty for first-time buyers of homes up to £300,000, home ownership is now a lot more feasible for many.
“The move has delivered a lot of positivity to a market that has been rocked by recent inflation and the Bank of England’s base rate rise. By removing and reducing Stamp Duty Land Tax, I hope that more potential buyers will decide to take the plunge soon, marking a return to a very active and healthy housing market.
“As well as the welcome reforms to Stamp Duty, the first-time buyer mortgage market looks like it will remain very attractive and accessible. Philip Hammond has pledged another £10 billion to the Help to Buy scheme to support equity loans, which is a strong signal that the government will continue to support an initiative that has helped 320,000 people purchase their own home.”
Looking for advice on buying your first home? Want to find out more about Stamp Duty, or Help to Buy ISAs? Read our latest issue here.
- Click here to find out more about Help to Buy and Shared Ownership
- Need help improving your credit rating? Head to pp.58-59 for top tips from our financial expert!
- Looking for some home decor inspiration this Christmas? Click here to find out more