Okay so not all first-time-buyers will benefit, but the majority will do. If you are buying a house for the first time and have agreed a purchase price of less than £500,000; you will receive the first £300,000 free from stamp duty!!!
This is a big move by the government to help those struggling to get a foot on the housing ladder. It will mean those who are saving for a deposit and who also need to save for legal fees, removal costs, mortgage fees, survey costs and so forth will have a little less to save, since the stamp duty previously payable has now been reduced by £5,000 on a house worth between £300,000 and £500,000. This ruling came into immediate effect yesterday.
Critics (such as the Independent Office for Budget Responsibility) are saying that this move does not go far enough to curb rising house prices, and many suggest that it will further push up house prices. They are suggesting that this will only mean first time buyers can afford to offer a little more and will mainly benefit those who own homes already.
Chancellor, Philip Hammond has pledged to increase housing supply by 300,000 per year by 2020, he stated: “House prices are increasingly out of reach for many, it takes too long to save for a deposit, and rents absorb too high a portion of monthly income.” While Labour leader, Jeremy Corbyn is not so optimistic stating that: “The government promised 200,000 starter homes three years ago and not a single one has been built. We need a large-scale public house building programme, not this government’s accounting tricks and empty promises.”
So, will the move assist first-time buyers? I believe it will make it easier for this group to complete with investment buyers, who will be paying significantly more stamp duty. However, we must recognise that by helping more young people make the move to homeownership we will be putting further strain on the stock of properties and this will inevitably increase prices.
The other issue we will see is for those houses priced at just over the £500,000 mark; we will of course find less interest in these properties and be likely to take lower offer. Of course, most first-time-buyers cannot afford a house of this value; therefore, the effect should not be severe, and we might find that the higher values paid for a house under £500,000 means those moving up the ladder can also afford a higher price.
The other issue is of course that we need those who live in their 1st home to make the next step to free up these properties for the first-time buyers, it is likely they may also struggle to raise the funds to pay stamp duty and therefore choose not to move.