There is no denying that the announcement that stamp duty was being removed for first-time buyers purchasing a home for less than £300,000 captured the imagination and media headlights. This was the big news story from the Autumn Budget in November 2017 and the move was heralded as a sign that the Government was keen to assist first-time buyers step on to the property ladder.
Of course, not long after the announcement, there was opposition from the Office for Budget Responsibility. The response suggested that the removal of stamp duty would lead to house price increases, negating the savings that first-time buyers would enjoy. There was an argument put forward that this move would be of more benefit to existing property owners than people looking to step on to the property ladder.
Savings can be put towards a deposit
While both viewpoints are valid, there is an argument that anything which lowers the up-front cost of buying property to be of benefit. The money saved from not having to pay for stamp duty could be put towards the deposit and increasing the size of deposit is always of benefit when looking to buy property.
Of course, not all first-time buyers will benefit from this move:
· Buyers purchasing property at less than £125,000 wouldn’t have paid any stamp duty
· Buyers purchasing property over £300,000 but less than £500,000 only receive some discount
· Buyers purchasing property over £500,000 receive no stamp duty discount at all
With the average price of one-bedroom properties in Dunstable listed as £153,588 and two-bedroom properties listed as £209,924, many first-time buyers in the area should be able to benefit. This wouldn’t be the case for most buyers in London or in some parts of the South East of England where the price of property is much higher.
Some firms have expressed an increase in interest from first-time buyers
The fact that this discount is likely to be applicable to most first-time buyers in Dunstable should be of benefit to the market. At the end of 2017, an agent in London, said they experienced a 10% increase in walk-ins from first-time buyers expressing an interest in property. Given that most first-time buyers in London aren’t even eligible for the stamp duty cut, it suggests that people are interested to see how or if this change impacts on them.
This is likely to be the same story in Dunstable. It may not convince many people who had no interest in buying a home to suddenly look for property but for prospective buyers who were wavering over buying property, this may provide them with added motivation to do so.
There is still industry doubt that the cut will help people buy homes. The Royal Institute of Chartered Surveyors, or Rics, polled their members at the end of 2017 and 66% of respondents said they didn’t expect there would be any impact from this change. 12% of respondents said that they did believe the cut would assist first-time buyers though, and it remains to be seen what the true impact on the market will be.
At Deakin-White, we hold an interest in the UK property market, and its movements, but our focus is on Dunstable and surrounding areas. If you want to be fully informed of how the local market reacts to the stamp duty cut, stay in touch with us and we will make sure you know what is happening.