North London agents say government's abolishment of stamp duty won't help first-time buyers in the capital
PUBLISHED: 16:27 22 November 2017 | UPDATED: 09:36 23 November 2017
Housing analysts and north London estate agents are among many who believe abolishing stamp duty for first-time buyers will have little impact on the capital’s housing crisis
Chancellor Philip Hammond announced as part of the autumn budget today, that the government will abolish stamp duty for first-time buyers on purchases of up to £300,000, and on the first £300,000 of purchases up to £500,000.
Mr Hammond also promised £1.5bn to “address concerns” about the flagship universal credit scheme, and unveiled lower growth forecasts.
A number of mortagage lenders, housing analysts and north London agents have since criticised Mr Hammond’s cut to stamp duty for first-time buyers, although one agent has reacted more positively to the announcement, claiming his agency have seen two exchanges and two deals agreed today since the budget was announced, from buyers “who have been holding back waiting to see what Phillip Hammond had in store for us”.
The stamp duty regime up until these changes has resulted in 146,000 fewer housing transactions during the past five years, according to a report published last week by lender Santander and think tank, the Centre for Economics and Business Research.
Housing was therefore always going to be one of the key themes of this autumn budget, for which the chancellor has pledged that for the “next generation”, getting on the housing ladder will not be just a “dream”.
Promising the government would deliver 300,000 new homes a year, he declared a £44bn capital investment and measures aimed at getting building projects started. Towards the end of his speech, Mr Hammond also made the pledge on stamp duty, which is paid by people buying properties over a certain value. Rates vary across the UK - in England, Wales and Northern Ireland it kicks in at £125,000.
Mr Hammond said his change would benefit 95 per cent of first-time buyers, but mortgage lenders and housing analysts have said the initiative would do little to help those struggling to buy.
The OBR (Office for Budget Responsibility) are particularly damning about Mr Hammond’s proposal, believing the stamp duty cut for first-time buyers will push house prices up.
“We expect this to increase house prices by 0.3 per cent, an estimate consistent with our published price elasticities for stamp duty changes. Most of this effect is expected to occur in 2018.”
The OBR also said the main gainers will be people who already own property, not first-time buyers.
“We assume that a temporary relief would feed one-for-one into house prices, but a permanent one will have twice that effect. On this basis, post-SDLT (stamp duty land tax prices) prices paid by first-time buyers would actually be higher with the relief than without it. Thus the main gainers from the policy are people who already own property, not the first-time buyers themselves.”
James Morton, director of north London estate agents Benham & Reeves is also critical of Mr Hammond’s proposals. He said: “We welcome the stamp duty cut for first-time buyers, and for lower priced homes, but first-time buyers still need properties to buy. Unfortunately, London prices are mostly over £300,000 anyway and much of the London market is being strangled by higher stamp duty, meaning second-time buyers are staying put rather than moving on, so this will have little impact on the capital’s housing crisis.
“Furthermore, the commitment to building more homes is also good, but house-building targets have not been met for so long now that today’s announcement offers too little, too late.
“Like many of my colleagues, I feel that the chancellor has missed a valuable opportunity to help the UK housing market today and I’m disappointed that hard-working Londoners will continue to be squeezed by unfair, regressive property taxes.”
Mark Pollack, director of Aston Chase has taken a more positive view of the chancellor’s announcement. He said: “The absence of any further negative measures is good news for the prime London residential market, as ‘appeared’ stability is long overdue! We have already had two exchanges and two deals agreed today, since the budget, from buyers who have been holding back waiting to see what Phillip Hammond had in store for us.”
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