Life after FTB Stamp Duty Exemption
Much has been made of the end of the first time buyer stamp duty exemption. Some considering it almost apocalyptic, how will this almost barren market every hope to improve when such a vital lifeline is cut off at source? Others prefer not to mimic a theatrical Premier League footballer, seeing it not as a catastrophe but as an opportunity to find a more viable way to help the first time buyer sector.
There is no denying the Stamp Duty Exemption has had an impact on first time buyer activity. According to research by Santander, the two year immunity is estimated to have helped around 170,000 novice buyers, collectively saving them £319m.
After the deadline, first time buyers will have to pay 1 per cent on properties valued between £125,000 and £250,000 and 3 per cent on purchases over £250,000. This could mean buyers will need an additional £2,500 on top of the thousands of pounds now required as a deposit.
However even with this exemption first time buyer purchases have slumped by almost two thirds in the last decade suggesting waiver alone cannot solve this persistent riddle.
The large obstacle is the size of the deposit needed in order to substantiate a mortgage. According to the Council of Mortgage Lenders (CML), the average amount a first time buyer needs to save is £26,000.
However a new scheme by the Government is attempting to tackle the crux of the problem. NewBuy minimises the risk of the lender allowing them to offer higher loan-to-value mortgages. Buyers are then no longer required to stump up these five digit figures to get a footing on the ladder.
Whilst the Stamp Duty exemption has played some part in keeping the FTB market afloat – and an extension wouldn’t be the worst thing in the world – it has done little to move the market on and whilst this safety net remains in place, there is less incentive to really get to grips with the problem.
Content correct at time of publication