In a move aimed at bolstering homeownership among young Britons, the Conservative Party has announced its plans to cut stamp duty for first-time buyers.
The £425,000 threshold for first-time buyers was initially raised from £300,000 on a temporary basis, with the party now looking to make this permanent.
The initiative seeks to address the housing affordability crisis and stimulate the property market, hoping the tax pledge will benefit around 200,000 households every year.
The recent collapse in demand for housing has led to a forecast decline in house prices over the course of the year, with Halifax anticipating a decline of 2-4% by the end of 2024. According to David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading stamp duty consultancy, the next government needs to address stamp duty thresholds in order to get the bottom-end of the market moving.
According to David Hannah, reforms to Stamp Duty thresholds as opposed to looking at rate cuts would be essential in getting the bottom end of the housing market moving in the long-term. Raising the threshold would have the benefit of taking more properties outside the scope of stamp duty, cutting the cost of acquisition for people looking to get onto the property ladder.
A scrapping of the second-home surcharge would also grease the wheels of the private rental sector, encouraging buy-to-let landlords to expand their portfolios and provide renters with a greater range of options.
David Hannah said, “SDLT payment bands have been long overdue for an overhaul as they have never been index-linked to house price inflation. An increase to these thresholds would stimulate activity at the lower end of the property market and allow first-time buyers to reduce the amount they need to borrow, thus improving their affordability calculations.
“As we all know, a rising tide lifts all boats, those looking to purchase properties on the mid-to-high end of the property market will now have a chance to sell their low-end properties as a result of the increase in demand from prospective buyers, contributing to further momentum within the housing market.”
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