Posted by martin humphreys - November 27, 2017 9:56 am Is the Chancellor’s help for first time buyers as good as it seems?

Autumn Budget changes to Stamp Duty Land Tax for First time buyers

The abolition of Stamp duty on homes costing less £300,000, with reduced rates for properties up to £500,000, was a headline grabber in Philip Hammond’s Budget on 22 November 2017.  The change will apply immediately in England and Northern Ireland, and in Wales until the end of March, but not in Scotland.  However, is this announcement as good as it seems?

Before the Autumn Budget

Prior to the Budget, a first-time buyer purchasing a house in England for £250,000 would have suffered a tax charge of £2,500.  That tax charge will now be nil.  However, according to a report from the Office for Budget Responsibility (OBR), it is likely that this tax saving will be offset by an increase in property prices.  Therefore, it is perceivable that the change may actually benefit sellers rather than first-time purchasers.  The OBR also reported that it is likely to benefit first-time buyers struggling to save a deposit rather than those unable to borrow enough because of their earnings.

Although this was initially welcomed as a help for those just starting out on the housing ladder, it remains to be seen whether this change will stimulate the sluggish property market in the way that the Chancellor intended.  The impact is also likely to be significantly less in the north where average property values are lower.