[ad_1]
A stamp duty cut announced by the UK government on Friday risks pushing up house prices and will do little to help first-time buyers on to the property ladder, according to housing experts.
Chancellor Kwasi Kwarteng laid out plans to cut the property transaction tax as part of his growth-focused mini-Budget on Friday. The move is designed to give a leg up to first-time buyers and support an increasingly fragile housing market.
The cut, which could save some buyers more than £10,000, would “support growth, increase confidence and help families aspiring to own their own home,” said Kwarteng.
Effective immediately buyers in England and Northern Ireland will pay no stamp duty on the first £250,000 of a property’s value — double the previous £125,000 threshold — and first-time buyers will pay no tax on the first £425,000, up from £300,000.
First-time buyers in London and the south-east could potentially save as much as £11,250 under the new measures, according to the government. Non-first-time buyers purchasing a house for £312,000 — the average price of a home in England according to the Land Registry — would save around £2,500, according to official estimates.
However previous stamp duty cuts have driven up property values because sellers add the theoretical saving on to house prices. The government’s stamp duty holiday in 2020 is regarded by property analysts as one of the reasons behind rapid house price growth in the two years since.
“There has been a lot of tinkering with stamp duty over the past decade and the one thing which is crystal clear is that buyers pay for cuts and sellers pay for rises through market adjustments,” said Roarie Scarisbrick, an estate agent at Property Vision.
The opposition Labour party criticised the cut. “These stamp duty changes have been tried before. Last time the government did it, a third of people who benefited were buying a second home, a third home, or a buy to let property. Is that really the best use of taxpayers money?” asked shadow chancellor Rachel Reeves.
Property experts said the measures would do little to insulate buyers from the effects of rising interest rates or meaningfully boost first-time buyer numbers.
The cut “helps first time buyers in London and the south-east. But [the saving] is still fairly small given the big deposits they need. It might help some buy a bit quicker but it won’t help those with no bank of mum and dad,” said Neal Hudson, a housing market analyst and founder of the consultancy BuiltPlace.
But he added that the cut may entice investors to target properties valued up to £250,000.
Richard Donnell, research director at property portal Zoopla, said the changes “won’t do anything [to address] the problems facing the [property market] in south-east England from mortgage rates moving towards 5 per cent from 2 per cent in January.”
He added that the measures were likely to have a neutral impact on the exchequer’s stamp duty tax receipts because 90 per cent come from properties valued at £250,000 or more, and prices are still rising.
The Treasury received a record £17.5bn from stamp duty in the 12 months to August this year.
[ad_2]
Source link
