Articles From the Team
Budget 2017 Stamp Duty!
The Chancellor’s 2017 Budget was the headline news story recently and at the centre, the housing market. The governments attempt to ease years of austerity has paved the way for a huge allocation of funds to the housing market over the next half a decade. The main beneficiaries are set to be the would-be home buyers particularly those looking to get onto the property ladder for the first time. But does the budget go far enough to help?
One of the key measures of the budget has seen the abolition of stamp duty for all first time buyers up to £300,000. This news has been welcomed by many and can arguable save 4 out of 5 people buying in London on average of about £5000. For the rest of us in the UK you are probably looking at an average saving of around £1600. Previously the tax threshold was paid on all purchases over £125,000 so the budget more than doubles the threshold and effectively gives 80% of first time buyers and exemption from the tax. Along with other measures such as £44bn of funding and a promise to build 300,000 new homes in the years to come the budget seems to have done much for the housing market. However this positive perception may be short lived!
The reality of the situation as echoed by many an expert has been that the budget hasn’t done enough for first time buyers. For example The Office for Budget Responsibility (OBR) said the measure was likely to inflate house prices by 0.3 per cent, meaning buyers will pay more. The OBR said: “Post- [stamp duty] prices paid by first-time buyers would actually be higher with the relief than without it. Thus the main gainers from the policy are people who already own property, not the first-time buyers themselves. “For some potential first-time buyers with smaller deposits, who are constrained by loan-to-value lending criteria, the relief will enable them to borrow a multiple of their stamp duty saving, allowing them to buy properties that they otherwise could not afford – but more expensively” (for more on that see here). Further adding to this opinion is Miles Shipside, Rightmove Director who said “First-time-buyers should think about acting quickly to take advantage of this stamp duty ban, before the extra demand it creates pushes up prices and starts to eat away at the extra cash this stamp duty exemption will free up" click here for more.
While it may be welcome news and may result in an influx of first time buyers the thought of many including myself is that the focus on bridging the housing generational gap should be based on the fact that many first buyers are unable to save the required amount for a deposit. House prices have continued to surge while wage growth has been stagnate at best, this is something that must change!
As the consultant working with residential conveyancer’s in the Home Counties it would be interesting to hear your thoughts on the centrepiece of the budget. Do you think more work could land on conveyancing desks around the country as a result? What about the budget itself, does it help first time buyers as hoped or is it too limiting in its reach?