This week, the Telegraph online reported in an article that a staggering statistic has revealed the impact the stamp duty increase has had on first time buyers in the housing market. Seven in ten buyers now have to pay the stamp duty, as the average price of a property in Britain has surpassed £200,000 for the first time, according to new evidence disclosed by Halifax. In its report, Halifax also went on to divulge that the number of first time buyers affected by the home buying tax has risen to a ten year high, following the Government’s plan to reform the tax.
At least 71% of buyers starting out at the first rung of the property ladder will be affected by a two-fold attack in the form of the stamp duty they are forced to pay, as well as sky-high property prices, up 26% from 45% in 2013. The Telegraph has compiled an analysis of the data and has shown that the amount of first time buyers paying the stamp duty has effectively doubled over the period, increasing from 121,455 buyers in 2013 to 238,382 in 2016. This has occurred even though stamp duty reforms back in 2014 were described as being a “tax on aspiration” by the then Chancellor George Osborn.
Property experts and politicians have noted that the “time had come” for a stamp duty review, claiming that the effect of the last Chancellor’s reforms had been enveloped by the unprecedented increase in house prices. David Willetts, a Conservative Member of the House of Lords and chairman of housing think-tank Resolution Foundation, said: “This is further evidence of how hard it is for young people to get on housing ladder as house prices are so high, and they have stamp duty tax to pay as well.” He went on to say that the “time has now come to look at whether stamp duty is working or if the market is gumming up, and also to give the maximum benefit to young buyers.”
The article also had thoughts from another property expert, Ray Boulger, from John Charcol, who asserted that the policy was “short-sighted” and wants the Government to grant first time buyers a stamp duty-free allowance of £250,000 in order to help them out when purchasing their first property. He remarked that taxing first time buyers is “short-sighted as they will become a future drain on the Government if they continue to rent as they will need financial support in old age. Scrapping or reducing stamp duty now would save much more money later.”
It is unclear whether the Government will make further changes to the stamp duty, and whether these changes will help or hinder the housing crisis the UK has suffered for a long time. But as of now, the market is very tough for first time buyers, and if the Government wants to be seen as the “good guys”, it is possible that starting with a reform of the stamp duty could go a long way for new property purchasers and assist them in the long run.