First-time buyers (FTBs) look set to benefit from a permanent stamp duty land tax relief just announced in the Autumn Budget, which will be worth £1,660 to anyone buying the average FTB property.
Because FTBs are typically more cash constrained than other house hunters out there and because stamp duty can prove to be a particular cash burden people have to pay on top of the likes of conveyancing fees and the deposit, it can be hard for them to take that first step onto the property ladder.
But now all first-time purchases under £500,000 will benefit from this permanent relief, with the government noting that the move will mean 80 per cent of FTBs won’t have to pay any stamp duty at all. Before now, FTBs had to pay the duty on house purchases over £125,000 but now stamp duty will be abolished for FTBs up to £300,000. It’s estimated that over the next five years, the relief will help more than a million FTBs get on the housing ladder.
When buying your first house, you’ll need to enter a code on your stamp duty return indicating that you are an FTB and then calculate the duty due according to the new rates.
“On and after Budget day, stamp duty will be abolished for first-time purchases up to £300,000 – the largest ever increase in the point at which first-time buyers become liable for the duty – and they will pay £5,000 less on purchases between £300,000 and £500,000. To focus this relief on those who need it most, it will not apply on purchases above £500,000,” HM Treasury explained.
However, the Office for Budget Responsibility (OBR) has already issued a warning that Philip Hammond’s plans to help young people get on the property ladder could actually drive house prices up, benefitting those who already own their own homes instead.
According to the OBR, the tax break could see prices pushed up by around 0.3 per cent, with the majority of this increase being seen next year, the Guardian reports. The forecasting group observed that the main gainers will be homeowners already and not FTBs, although some FTBs who have smaller deposits will be able to borrow a bit more. This will allow them to buy houses they wouldn’t have been able to afford otherwise – but it will cost them more.
Other measures announced in the Budget to reverse the drop in homeownership and help the country build more homes include allowing local authorities to charge double council tax on empty properties. A review has also been promised into why a gap exists between the number of properties given planning permission and the number that are actually built.
Borrowing caps for councils are also set to be lifted in more expensive parts of the country so they’re better able to build more homes.
Anlaby estate agents like beercocks can help FTBs find and buy their first property with ease. We provide a free cost of moving appointment so you know how much you’ll need to budget for and we also provide free valuations of properties to help you make key decisions. Call us today to take advantage of our vast local knowledge.