In yesterday’s Autumn budget the Chancellor Phillip Hammond announced the scrap of stamp duty charges for first time buyers purchasing a property up to £300,000 and on the first £300,000 of any property up to £500,000.
To many this is welcome news that will help young people take a step on the property ladder however the Office for Budget Responsibility (OBR) is damning the proposal.
The OBR suggest the stamp duty cut will push house prices up. It says it expects this policy to increase prices by 0.3% with most of this effect taking place in 2018.
The OBR is also saying that the people to gain from this will not be first time buyers but those who already own a property through higher house prices.
They are backing up their view by looking back at the stamp duty holiday announced by Labour Chancellor Alistair Darling back in 2008 following the financial crash.
The stamp duty holiday applied to purchases on houses costing less than £175,000. When HMRC published an evaluation part way through that holiday it actually concluded that the majority of the value of relief had fed through to higher house prices.
Other experts seem to share similar ideas, Jon Ostler UK CEO of personal finance site Finder.com also thinks the government fell short, commenting:
“In order to truly help first-time buyers in the short term, the government would need to offer a far greater incentive. We can learn from our friends in Australia who offered significant grants to first-time buyers of between £4,000 and £10,000, this level of investment proved to make a real difference to the number of first homes bought.
As it stands, first-time buyers in the UK are going to have to rely on the delivery of the Governments house building investment and initiatives to deliver affordable housing, but this could take some time.”
Jason Lowes planning partner at property consultancy Rapleys says the budget is no ‘magic bullet’ for Britain’s housing problems.
“While many in the property industry will be buoyed by the reforms to Stamp Duty Land Tax for first time buyers and Business Rates, the lack of progress on planning risks undermining what was, we were led to believe, intended to be a blockbuster housing Budget.”