Chancellor Philip Hammond unveiled the first Autumn Budget earlier today (22 November), and while there weren't many ground-breaking revelations, there was one highlight that will make would-be homeowners sit up and take notice – stamp duty has been largely abolished for first-time buyers, a move that could see 80% of those buying their first home pay no stamp duty whatsoever.
Hammond announced that, from today, stamp duty land tax will be completely abolished on homes under £300,000 for first-time buyers, while those seeking homes worth up to £500,000 will pay no stamp duty on the first £300,000, which means even those in London could benefit.
According to HM Treasury, the move means that in every region outside London, the average first-time buyer will pay no stamp duty whatsoever, while new buyers in the capital will see their stamp duty bill almost halve from £10,500 to £5,500. Ultimately, the change could benefit 95% of first-time buyers and could save them an average of £1,660, drastically reducing upfront costs and making it that little bit easier to get on the ladder.
The announcement has been welcomed by many, with Ishaan Malhi, CEO of online mortgage broker Trussle, saying: "It's been a while since first-time buyers have been able to take anything positive from a Budget.
"Yesterday, the average first-time buyer would be looking at a stamp duty bill of between £1,500 and £2,000. Today, this charge has almost disappeared, which will have an immediate positive impact on the ability of young people to get on the property ladder. It will also reduce some of the stress associated with the journey to homeownership, which could have positive knock-on effects on the way that people manage their mortgage in the future."
However, other commentators take a more mixed view, as while any help to get buyers onto the ladder is welcome, some argue that it doesn't go far enough and won't measurably improve affordability by any extent. What could help is the pledge to build more houses, but is even this enough?
The Chancellor also reiterated the Government's commitment to boosting housing supply across the UK, by pledging to reach a target of building 300,000 new homes a year. This will be delivered with the help of £15.3bn in new financial support for house building over the next five years, including £1.2bn for the Government to buy land to build more homes, and £2.7bn for infrastructure that will support housing.
The Government is also pledging to create five new 'garden' towns, and to implement changes to the planning system to encourage better use of land in cities and towns in order to ensure that "more homes can be built while protecting the green belt".
So far so good, but Russell Quirk, CEO of eMoov.co.uk, thinks it could be a case of too little, too late; he believes that the likelihood of hitting the target is slim, and says that the review of the gap in planning permission and the actual building of houses "should have been implemented many budgets ago … The Government must actually execute on a housing plan if the current housing crisis is to be remedied."
He concedes that the cut to stamp duty is a sign of good intent and "may help reignite the property market momentarily," but that the failure to build enough affordable homes is the real issue.
Simon Heawood, CEO of Bricklane.com, takes a similar view: "While welcome, abolishing stamp duty is a drop in the ocean given the affordability challenge of getting Generation Rent onto the property ladder. Increasing supply of the right kinds of housing will go some way to stopping ever-rising house prices, but many of Generation Rent still face the prospect of waiting many years to buy their own home."
Despite the fact that not everyone has been blown away by the Budget, the fact remains that first-time buyers could still benefit from the cut to stamp duty. It may even enable them to get on the housing ladder sooner than expected, as they won't have to save quite so much for upfront costs, which means that first rung could be closer than you think.
If you're one of the many to benefit, now could be the time to start looking at your first-time buyer mortgage options. Check out our Best Buys to get an idea of the options available, or if you want a more personalised overview, use our mortgage calculator to be presented with those options that could be perfect for your needs. Then all you've got to do is find that first home!
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