Reports suggest that Chancellor Philip Hammond is ready to boost first-time buyers by announcing a cut in stamp duty at the Budget in November.
A report in the Evening Standard said the Chancellor’s plan would be “worth thousands” to the many young people in particular who are struggling to afford to buy their own home. According to the paper, Mr Hammond is ready to embrace “bold measures” that would restore “intergenerational fairness” to the property market.
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The Standard pointed particularly to the extra burden that stamp duty imposes on first-time buyers in London where the average price paid for a first-time purchase is £428,546 with starter flats costing around £250,000.
Tax is imposed on a sliding scale
Stamp duty is paid on a sliding scale on all property transactions over £125,000, from 2 percent up to 12 percent for properties over £1.5 million. The duty to be paid on a £250,000 starter flat would be £2,500.
A report last month in the Daily Express called for stamp duty reform after the revelation that transactions are falling most in the brackets where the tax is highest.
However, the Standard suggests the focus for the Chancellor will be on relieving the burden on first-time buyers next month.
Meanwhile, the trade body that represents the UK’s estate agents has also put its efforts into persuading the Chancellor to reform stamp duty. NAEA Propertymark has provided a submission to the Treasury in advance of the November budget.
Call to exempt elderly from payment
That submission asks for an exemption for first-time buyers in paying stamp duty, while also proposing that elderly people downsizing to smaller homes are also given a break from paying the tax. It has been claimed that pensioners sitting in under-occupied, larger properties are often reluctant to sell up because they don’t want to have to pay stamp duty on a new home.
In its submission, the NAEA said: “By making it easier for older people to sell their homes, it will free up family-sized homes for the next generation and boost housing supply.”
If you’re a first-time buyer, check out Homeward Legal’s comprehensive First-Time Buyers’ Hub where all your questions about purchasing for the very first time are covered in detail.