First-time buyer stamp duty for homes up to £300,000 has been abolished. For properties in high price areas in excess of £300,000 the measure will apply on the first £300,000 of a purchase. It means 95% of first-time buyers will see at least a cut in the amount of stamp duty, with 80% paying none at all.
While delivering the Budget, the chancellor said the policy would help a million people get on the housing ladder.
“Hopefully, by abolishing stamp duty, which will save the average first-time buyer about £1,700, that will be a help and an incentive to focus on getting the deposit together, getting the money together to get on the housing ladder, and we hope that many more young people will be able to get on the housing ladder,” Philip Hammond went on to tell BBC Breakfast.
However, the Office for Budget Responsibility (OBR) said the policy would push up property prices by around 0.3%, meaning many first-time buyers would have to pay more and people who already owned a property would gain more. It also suggested only around 3,500 additional homes would be sold as a result of the incentive.
Conservative MP Kwasi Kwarteng, an aide to the chancellor, says the predicted increase in prices will still be less than what buyers will save.
Philip Hammond has rejected criticism that saving enough for a deposit was the key barrier to home ownership, rather than stamp duty. First-time buyers need an average deposit of £33,000, which in London typically rises to £106,577, according to Halifax.
Mark Hayward, chief executive of NAEA Propertymark, said: "This move will increase the demand for FTB properties and if we don’t have the supply it will push prices up. We have seen this in areas where Help to Buy is offered, as it attracts a great deal of interest from FTBs.
“In terms of the Government’s plans to build 300,000 new homes a year, it is yet another pledge to increase the number of new homes created. While we welcome this news, we have historically had these announcements from Government to accelerate housebuilding which has not been delivered. It is not a question of ‘how many’, it’s a question of ‘how’.”
For the latest Budget reaction and news about the stamp duty cut, please visit BBC News Live.
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