Today’s budget was billed as the ‘Housing Budget’ with Chancellor, Phillip Hammond delivering his speech with the headline grabber being the abolishment of Stamp Duty and Land Tax (SDLT) for first time buyers.
Effective immediately, first-time buyers will be exempt from Stamp Duty charges on purchases of up to £300,000 outside of London, or an exemption from the first £300,000 of a property’s value inside London, up to a total property value of £500,000.
According to the Chancellor, this means a stamp duty cut for 95% of first-time buyers who pay stamp duty, and 80% will pay no stamp duty at all.
Will the abolishment of Stamp Duty have a positive impact on people who already own their own homes?
Existing homeowners may still benefit from the changes, but the impact is likely to be less direct. First time buyers are seen as the ‘lifeblood of the property market’; by purchasing their first property they stimulate an upward filter of activity in the market, benefitting second steppers who are moving to a larger property.
For example, if you are currently living in your first home but now need to move to a larger property, then with the higher Stamp Duty thresholds there will be a higher demand for the type of property that you are selling, making it more appealing for you to put your property on the market.
In effect then, today’s announcement could help you to sell your home, even if you don’t benefit directly from the Stamp Duty cut.
How the Stamp Duty changes could affect house prices?
It’s very possible that, in areas where an undersupply of housing is already keeping values at their record high, a higher demand at entry level from first time buyers could fuel prices even further in the short term, until such times as the significant number of new homes we need are actually built in order to ease the supply issue, together with enough second-hand stock becomes available to ease the pressure.
Rightmove Director and Housing Market Analyst Miles Shipside commented: “First time buyers should think about acting quickly to take advantage of this stamp duty ban, before the extra demand it creates pushes up prices and starts to eat away at the extra cash this Stamp Duty exemption will free up.”
But some experts in the property industry are less than impressed with the move…
TV star and owner of estate agent Tepilo Sarah Beeny doesn’t believe Hammond’s proposals will make much difference to the property market in the UK – or house prices.
Sarah comments; “The only people it will really help are first time buyers purchasing high worth properties, who already have the funds to do so. Essentially, it strikes me as a bit of a PR stunt designed to generate headlines, but something that will actually make very little difference to the market.
“A reduction in stamp duty for second steppers and downsizers would make a much bigger difference, allowing people to move up and down the market more freely and cost effectively – and freeing up first-time buyer and family homes for the right people.”
Martin Lewis spoke on LBC as the Budget was being announced, and the TV star questioned whether or not people would benefit from the stamp duty exemption if they were buying with someone who had already owned a property. This still hasn’t been clarified.
But opinions are mixed with Jeremy Duncombe, director of the Legal & General Mortgage Club, welcoming the change as a “promising move from the Government which will no doubt be welcomed by thousands of younger buyers”.
Jeremy continued: “For too long, stamp duty has stood as just another barrier to home ownership, another cost to overcome, but with this exemption the path to owning a home has been made just that bit easier.”
So for existing homeowners, and particularly owners of properties that are suitable for first-time buyers, it will be important to take advantage of the initial momentum the Stamp Duty cuts will generate. Home owners may wish to think about marketing their property soon if they have been thinking about making a move up the ladder themselves.
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