Stamp Duty Changes
Budget 2017 Stamp Duty changes – our perspective
There’s been a mixed reaction this week, to Chancellor Philip Hammond’s decision to axe Stamp Duty for first-time buyers on the first £300,000 of any purchase.
Some have questioned how many FTBs will realistically benefit, given that they already don’t pay the property tax up to £125,000, and anything over that will only apply to those at the wealthier end of the spectrum.
But we think there are reasons to be cheerful about this change, not just for FTBs but for anyone else with a vested interest in property, too.
Young professionals in the South have long lived with the harsh reality of having to rent into their late 20s or 30s, while they build up sufficient deposit to secure what is still an entry-level property ‘down there’.
Those who are fortunate enough to be able to do so, stand to save up to £5,000 on their purchase, which is what they would previously have paid on the difference between the £125,000 exemption limit and the new £300,000 one.
But actually, in our opinion, Wednesday’s announcement was important for more reasons than just the positive impact it will have on – some – pockets of FTBs.
It’s another strong signal to the housing market, aimed at driving positive growth that will ultimately help anyone owning, buying or selling a property in the UK. First-time buyers are, after all, the ‘engine room’ of the country’s property market. Keep them moving and the wheels they power will carry on turning just fine.
The context for this announcement
This change is the latest in a string of help measures the Government has put in place to help FTBs flourish. We’ve also had the Equity Loan Help to Buy scheme on newbuilds, which sees the State funding 20 per cent of a property purchase price for qualifying buyers, reducing the amount they had to find for both their deposits to just five per cent. The Mortgage Guarantee version of the scheme applies to existing and newbuild properties and the State will guarantee 15 per cent of the loan, while the buyer, again, needs a deposit of just five per cent.
And then, of course, there’s the Lifetime ISA, where the Government tops up the savings of anyone under the age of 39 at the start, with up to £1,000 a year from the age of 18, if they add the maximum £4,000 to their account annually. This can be used either as a house deposit fund by first-time buyers, or as a retirement savings pot – accessible from age 60 – by anyone.
Similarly, Help to Buy ISAs allow first-time buyers to save up to £1,200 up front, and then up to £200 per month, and the Government will add 25 per cent to whatever they have built up when they come to buy a home.
A few things you need to know
Anyone who had already embarked on a property purchase before the Budget 2017 will still benefit from the change, which kicked in as soon as the Chancellor announced it on Wednesday. This is because Stamp Duty is only payable on completion of your purchase.
If you are buying a property in joint names with someone else, you must both be first-time buyers to qualify for the Stamp Duty exemption. If one of you owns a property already, unfortunately neither of you will be able to benefit.
Other reasons to be cheerful
The Chancellor also announced that the Government will be pushing for 300,000 new properties to be built annually, both improving supply and having a positive knock-on effect on jobs, via all the trades that supply the housebuilding industry. Everyone from surveyors to brickies can expect to be pretty busy.
All-in-all, though, anything that boosts confidence in the property market is great news for us all.
If you’re thinking of buying a property and could do with some advice on this or other aspects, get in touch with us at https://www.hoocht.com.