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One of the most popular topics of conversation among estate agents since the threshold changes last year has been stamp duty and how it should be reformed. Today, the Chancellor of the Exchequer demonstrated that he has listened – despite it being received as rather unambitious.
In his Autumn Budget, he announced that all first-time buyers will no longer have to pay stamp duty on homes up to £300,000 – or on the first £300,000 of the purchase price of properties up to £500,000 in very expensive areas.
In doing so, Phillip Hammond has given a small fillip to the housing market because homeownership among young people has gone down from 59% to 38%.
He said it means a saving of about £5,000 – a very useful sum for any first-time buyer – and it also means a stamp duty cut for 80% of first-time buyers from today. The abolition of stamp duty for this group is expected only to cost the Exchequer £600 million a year in the course of this parliament, but with the help to buy scheme, too, it is to be welcomed.
While it’s not thorough reform of stamp duty, which I’d hoped for, it is a help and I’ve no doubt this will ensure fluidity in the market and will keep the business of house buying and selling moving.
Many of us in the industry had expected a temporary stamp duty holiday for first-time buyers but it was great news to hear the Chancellor say a stop-gap would only help those who are ready to purchase now and would offer nothing for the many who need to save for years before they can buy their first property.
The measure will also help those homeowners who are looking to sell their first property because it is this bracket of homeowner that is struggling to sell their property to upsize.
Stamp duty is only part of the problem, however. Building more houses is the most obvious solution to the supply and demand issues, so it was good news to hear that the government has made a £44 billion commitment to house building and has pledged that by the mid-2020s, there will be 300,000 homes being built a year.
It’s also good news that planning reform is being examined and that land banking – where developers sit on the land they own and do not build homes, despite having planning permission – could be tackled. It is a problem in Birmingham city centre, the suburbs and the West Midlands, as it elsewhere across the country. The government could intervene by compulsory purchasing sites that are not being developed purely because of financial reasons.
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