Hammond defends stamp duty cut for first-time buyers

Industry experts give their opinion

Chancellor Philip Hammond’s ‘balanced’ Budget has been met with mixed reactions. There has been no major announcement in the Autumn Budget this year except stamp-duty cut for first time buyers.

Yesterday, Hammond had announced scrapping the stamp duty for first-time home-buyers costing up to £300,000, and allowed home-buyers up to £500,000 to escape the tax on the first £300,000 of their purchase.

But the OBR has stated that the move would push up house prices by 0.3 per cent with most of the effect in 2018.

Defending this, Hammond has said that the OBR’s assessment did not take into account other measures in the Budget. He told media: “Hopefully, by abolishing stamp duty, which will save the average first-time buyer about £1,700, that will be a help and an incentive to focus on getting the deposit together, getting the money together to get on the housing ladder, and we hope that many more young people will be able to get on the housing ladder.”

Talking about the impact of stamp-duty cut on buyers looking to get onto the housing ladder, Guy Gittins, Head of Sales, Chestertons says: “This is great news for first-time buyers. On top of the Help to Buy scheme and other incentives already in place, abolishing stamp duty up to £300,000 is a positive step from the government to help this group of buyers onto the housing ladder. It is however disappointing that the Chancellor didn’t raise the stamp duty threshold in London to £500,000 to reflect the higher average house price in the capital which now stands at £483,568, according to Land Registry…The real issue that needs to be tackled is increasing the supply of properties, and while the Chancellor has committed himself to addressing ‘land banking’ by developers, without sufficient supply, this stamp duty announcement could cause a bottle neck at the £500,000 threshold.”

Talking about how chancellor’s plans to build more homes is a tall order, Generator Group’s managing director, Paul Isaacs says: “Recent figures released by the Government show an increase in housing stock, up 15% on last year, which is a step in the right direction. However, Chancellor, MP Philip Hammond, has got a lot to do to deliver his new target of 300,000 homes per year as announced in his budget speech. I think this is a tall order given we can’t achieve the existing target!”

“The whole industry has needed a radical overhaul for years and the news that all first-time buyer purchases, up to £300,000, will have no stamp duty to pay is welcoming for those struggling to get on the property ladder…For some time I have been saying the planning system that is politically motivated, at a local level needs to change, along with the accessibility of funding for smaller housebuilders, so they can both help speed up the delivery. The price of land that is offered to small and medium sized developers like Generator Group has been on the increase for some time, as are build costs due to a shortage of skilled labour and materials, so prices are not just affecting the end buyer. We look forward to seeing how the Chancellor will invest £8 billion to private housebuilding and PRS development, and an additional £34m to develop construction skills across the country.”

Talking about how this stamp-duty abolition will do little to help the London property market, Andrew Ellinas, Director, Sandfords says: “… I feel that there were a lot of missed opportunities and I am disappointed that there wasn’t a much further reaching reform of the property taxation system. The problem in London is that a £500,000 budget won’t buy you very much. Also, there wasn’t any help for homeowners already on the ladder that need to move. The increased stamp duty for properties over £1 million means many in London can’t afford to progress so where are all these first-time buyer properties going to come from? The London property market is the driving force behind the entire economy and if that stops then it prevents transactions elsewhere.”

Meanwhile, the Office for Budget Responsibility (OBR) has stated that the main beneficiary of this would be those who already own property as it will mean they can sell their homes for more.