New stamp duty rules, designed to help first-time buyers, could be “redundant” within 10 years according to a new industry report.
Broker L&C Mortgages estimates that rising house prices will push four million homes outside of this stamp duty threshold by 2028.
The chancellor abolished stamp duty for first-time buyers in his 2017 Budget, but only for those purchasing properties up to £300,000. Those purchasing properties costing up to £500,000 pay a reduced rate.
There is currently no stamp duty to pay for any buyer purchasing a property for £125,000 or less.
L&C’s report notes that fewer first-time buyers in the South East will benefit from this stamp duty exemption in future. London will be particularly hard hit, it says.
L&C estimates that in 10 years over half of the 52,002 properties in London that currently qualify for this stamp duty relief will not benefit.
Currently around 57 per cent of properties for sale in London would benefit from this stamp duty exemption. L&C estimates that this will fall to 28 per cent in 2028.
It points out it isn’t just homes in the capital that will be hit. In Brighton almost a third (30 per cent) of properties that are currently eligible to pay less stamp duty, are unlikely to qualify 10 years from now.
In order to address this issue the mortgage broker is calling for the government to remove these thresholds and consider abolishing stamp duty for all first-time buyers, regardless of the price of the property.
The report also highlights which areas in England currently benefit the most. Southampton (88 per cent), Norwich (87 per cent), Bristol (87 per cent) and Plymouth (80 per cent) have the largest proportion of property sales between £125,000 and £500,000.
London has a relatively low proportion of properties within this band, primarily as many are over the £500,000 mark. Other cities have lower percentages as many homes fall below the £125,000 threshold.
L&C’s spokesman David Hollingworth says: “It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in 10 years’ time. As a priority the government needs to ensure that there is at least a plan in place to review SDLT relief bands to guarantee sustained support for would-be homeowners now and in the future.”
His adds that this research shows that those planning to buy in the south of England may need to act fast before properties that are currently eligible fall out of this price bracket.
The report also found that three out of 10 (31 per cent) would-be first-time buyers said they didn’t know whether they would benefit from this stamp duty abolition.
Hollingworth adds: “There’s still work to be done by the government, and the wider market to educate first-time buyers and address this lack of understanding. Those looking to get on the ladder have been offered a small light at the end of what is considered to be quite a dark tunnel, but if the government doesn’t work harder to illuminate what is on offer then many won’t even be aware that this help is available.”
