First Time Buyers stuck in rented limbo as Stamp Duty reprieve nears end
Published: 26/01/2012
It takes low and middle income (LMI) earners, on average, 22 years to save enough money for a deposit for their first property, according to Resolution Foundation.
In its report, Squeezed Britain, the independent think tank cited the shortage of higher LTV mortgages as a primary reason for LMI households remaining stuck in rented accommodation. 52 per cent of LMI earners now have the belief they will never own their own home.
LMI earners are classed as those bringing in an income which is below the UK average. For couples without children, this is £12,000 - £29,000 and for couples with children, it is £17,000 - £41,000.
LMI earners under 35 have seemingly taken the biggest battering. According to the report, just over a third of this group now own a property compared to 51 per cent six years ago. Parallel to that, LMI households under 35 who now rent has more than tripled over the last 25 years; in the late 1980s just 14 per cent rented while now 47 per cent do.
And now taking that first step is about to get even harder as the Stamp Duty exemption for FTBs is set to come to an end in March.
Without the exemption, FTBs will have to pay an additional 1 per cent on house purchases between £125,000 and £250,000 and from 3 per cent upwards on houses valued over £250,000 on top of the large deposit required, something the National Association of Estate Agents (NAEA) fears could have a disastrous impact on this already fragile market.
Wendy Evans Scott is the President of the NAEA:
“First time buyers are key to a healthy property market. We hope to see the number of people completing the purchase of their first home continuing to increase through February and March, as many first time buyers are keen to purchase their first home before the tax exemption deadline.
“However, it is impossible to predict what impact the end of the tax exemption will have on first time buyers, particularly those on very tight budgets of under £250,000 for whom the 1 per cent tax could be disastrous.
“The government will need to monitor sales closely and consider other action to support the fragile first time buyer market.”¹
Content correct at time of publication