Stamp Duty is to be removed with immediate effect for first-time buyers who are purchasing a home of up to £300,000, but some argue that pre-existing homeowners will be the real beneficiaries.
As part of Budget 2017, the change will be applied to properties in England and Northern Ireland but not Scotland, which has an independent system for land tax. Stamp Duty will be devolved in Wales from March 2018.
Before the Budget 2017 announcements, Stamp Duty was paid on residential properties with a minimum cost of £125,000, at a starting rate of 2%, which then increases in line with the property’s value.
Now, properties costing up to £500,000 will not incur Stamp Duty on the first £300,000, which means that 95% of first-time buyers will have a cut in Stamp Duty and 80% will pay none at all, according to the Chancellor, Philip Hammond.
However, the Office for Budgetary Responsibility (OBR), believes that homeowners will benefit more, estimating that all house prices will increase by 0.3% over the next 12 months as a consequence of the announcement.
They also warned of a “cliff edge” situation, where a first-time buyer wanting to purchase a home worth £500,001 would have to pay £5,000 more in Stamp Duty than if it was worth £500,000.
Others also argue that Stamp Duty is not the difficult cost, but rather that saving a deposit is. According to Halifax, the average deposit for buying a house is currently £32,899, much higher than the average Stamp Duty charge, which is £1,654.
A member of the Institute of Public Policy Research, Tom Kibasi, said: “Unaffordable house prices are the problem, not Stamp Duty.
“For most young people, the Stamp Duty cut will make little difference. But it will help the beneficiaries of the bank of mum and dad.”
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