Stamp duty for first time buyers
Such has been the degree to which criticism of the Stamp Duty Land Tax (SDLT) has been mounting in recent months that it seemed we were indeed reaching a point where something had to give.
Only last week, for instance, academics at the London School of Economics demanded that the Chancellor of the Exchequer, Philip Hammond, be “brave” and replace SDLT with a beefier version of council tax.
I must admit that I felt it was unlikely but it appears that Mr Hammond embarked on a course of action braver than either I or the LSE could have possibly anticipated.
During a pun-packed Budget, he decided to more than double the level at which SDLT becomes payable for first-time buyers – increasing the limit from £125,000 to £300,000.
So what are our thoughts on these new rules on stamp duty for first time buyers?
On the face of it, it seems a bold initiative to help onto the housing ladder those so far excluded by rising property prices. It has been estimated that four out of every five first-time buyers will save £5,000 which they would otherwise have had to cough up as a result.
However, after Mr Hammond had taken been applauded by his Cabinet colleagues for pulling the economic equivalent of a rabbit from his ministerial red box, eagle-eyed sceptics swiftly began to put the move into a fuller context.
The Office for Budget Responsibility (OBR) calculated that it was likely to make the process of buying a home more difficult by actually pushing prices up.
Whilst other economic commentators acknowledged that the announcement would certainly benefit those individuals fortunate enough to stump up more than the average house price for their first home, they reckoned that there’d be repercussions for those less well off.
It would, they suggested, do nothing to avoid a scramble for cheaper homes, increasing demand for more cheaper homes to be built.
Only estate agents, it seems, were left cheering the SDLT switch with share prices rising in expectation of generating more commissions from sales in the months to come.
I can understand why Mr Hammond opted to make raising the SDLT threshold his most noteworthy gesture.
With the economy on track for the worst annual growth set of figures since the recession, his Stamp Duty measure amounted to something of a necessary diversion.
However, what he must surely have realised is that the fine details of his Budget which he wasn’t able to provide at the Dispatch Box would be pored over in the hours which have followed.
It shouldn’t come as too much of a surprise to learn, therefore, that although positive, the latest step in Downing Street’s Stamp Duty Shuffle is far from a panacea.
If you have any queries regarding stamp duty for first time buyers, or property taxes in general, then please get in touch.