Chancellor Philip Hammond is reportedly considering a cut to stamp duty for first-time buyers.
The Evening Standard, of which former Chancellor George Osborne is now Editor, reported that the cut is among “bold measures” being studied ahead of next month’s Budget.
A Conservative source told the paper: “The Budget is a good opportunity to seize the political initiative domestically through bold measures on issues like housing. A stamp duty cut for first-time buyers would help all those in London whose starter homes are above the threshold of £125,000.”
However industry experts have warned that such a move could push up house prices, negating any savings.
Homebuyers in England and Wales paid £8.3 billion in stamp duty in 2016 – £1.2 billion more than in 2015, according to Lloyds Bank research. It found that the proportion of first-time buyers paying stamp duty has risen in the past 16 years from 47% in 2001 to 78% in 2017.
In London, homebuyers paid a total of of £40,576, 320% more than the average for England and Wales.
In Greater London, 100% of first-time buyers face paying stamp duty with 98% of first-time buyers paying the tax in the South East. The only region where fewer than half of first-time buyers pay stamp duty is the North at 41%.
Simon Heawood, CEO and founder of Bricklane, commented: “It is welcome news that the Chancellor is considering helping first time buyers who are almost priced out of home ownership, particularly in London where average first homes now cost £428,526.
“Lowering stamp duty for new entrants would be positive but, even if it were removed entirely, it would not address the deep underlying issues that mean the average first home deposit required in London is now above £100,000. We need structural improvements to increase supply of the right types of homes alongside alternative ways of investing in the property market so that those who cannot yet afford to buy do not miss out.”
Article written by Rozi Jones for the Financial Reporter website on 17th October 2017