How Will the New Stamp Duty Change Affect the Property Market
This week saw the announcement of a very significant Stamp Duty Break from The Chancellor Rishi Sunak. It was announced that house buyers wont be required to pay stamp duty on a house worth up to £500,000. Previously their was zero stamp duty on homes up to 125,000 this new change will provide relief for the majority of home transactions between now and March 31st 2021.
Existing Homeowners will Benefit more than First Time Buyers.
This generous announcement from The Chancellor will provide a boost to the number of transactions. Who will benefit the most is already being debated and it seems that people are concerned that first time buyers may not be able to take advantage of the scheme in time.
First time buyers have already received a zero stamp duty relief on properties worth up to £500,000 in London and up to £300,000 for the rest of the country. Therefore it’s safe to say that these new measures will not provide any extra help for first time buyers who are looking to buy in London. For first time buyers across the rest of the country it will only provide a further benefit to those who are buying a home worth between £300,000 and £500,000. Seeing that the average cost of a first time buyers house is £220,000 then for the majority of first time buyers this will not provide further financial help and the Chancellors message may not provide much of a boost to new buyers entering the market.
A think tank is suggesting that first time buyers may be worst off as previously they were the only type of buyer who retained such a stamp duty benefit and now they are fighting a level playing field with the rest of the market, therefore losing their advantage. Also, this stamp duty boost may cause house prices to rise, further pricing first time buyers out the market.
Mortgages are Still Hard to Attain
Regardless of a Stamp Duty saving if buyers are unable to attain a mortgage then we may still not see a boost to transactions. It has been pointed out that there is a restriction of the availability of lower deposit mortgages and the lack of high LTV 90% and 95% mortgages will mean that many first time buyers will also struggle to save the required deposit. The Government needs to force the hand of the lenders to supply more easily attainable mortgage products, in return more buyers may enter the market and that will fuel price demand and help stabilise property prices.
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