Time to buy for first-timers?

First-time buyers should take advantage of stamp duty drop, say experts

www.mortgagefinancegazette.com

First-time buyer house sales at lowest level in four years

According to NAEA Propertymark, the estate agency trade body, property sales fell to 25% in 2017 from 28% the previous year.

In 2017, demand spiked in January and February at 425 house-buyers registered per branch. Demand was higher this year than in 2016, with an average of 380 prospective buyers registered per branch, compared to 365 on average over the course of last year

Supply of housing peaked in February with 44 properties available to buy per branch. Year on year, supply has not shifted, averaging at 39 properties available per branch in 2016 and 2017.

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Is Stamp Duty relief worth having?

By Diane Cooke

Chancellor Philip Hammond scrapped stamp duty for many first-time buyers in his last Budget.

From November 22, 2017, people buying a first home priced up to £300,000 will pay no stamp duty.

Stamp duty relief will also be available on the first £300,000 of the purchase price of properties up to £500,000, to reduce the costs for first-time buyers in high-price areas, such as London.

The Treasury calculates this will reduce property tax for 95 per cent of first-time buyers, and means that 80 per cent of them will pay no stamp duty at all.

If a property is worth £450,000, you will pay no Stamp Duty on the first £300,000 and 5% on the remaining £150,000.

Under the old system, first-time buyers would pay £12,500 in Stamp Duty on this £450,000 property. The new system means they will pay just £7,500.

However, according to Robert Gardner, Nationwide’s chief economist, the changes to stamp duty are unlikely to have much of an effect.

“The decision in the Budget to abolish stamp duty (SDLT) for first-time buyers purchasing a property up to £300,000 (with relief for those purchasing a property up to £500,000) is likely to have only a modest impact on overall demand,” he said. “In many regions, first-time buyers already paid little or no stamp duty as the price of the typical first-time buyer property was below the previous threshold of £125,000. The potential savings are more substantial for borrowers where house prices are higher, especially in London and the south-east.”

As the Office for Budget Responsibility had already noted, some of the benefit is likely to be passed on to existing homeowners through higher house prices, though overall impact on prices is likely to be very modest.

But the advice from some experts is to take advantage of the tax relief before house prices rise further, as savings can still be made.

To be classified as a first-time buyer you must never have owned a residential property in the UK or abroad. This includes freeholds and interests in leaseholds.

You must also be purchasing your only or main residence. This means first-time buyers cannot get Stamp Duty relief on buy-to-let properties.

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Stamp duty impact might be small but first-time buyers should snap it up

The recent changes to stamp duty for first-time buyers may only be a drop in the ocean, according to critics, but first-time buyers should still take advantage.

According to the latest figures released by Nationwide Building Society, the annual rate of house price growth remained stable in November at 2.5%.

Despite this, annual growth stays within the 2-4% range that has prevailed since March. Nationwide’s latest house price index revealed how low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. In addition, the lack of homes on the market is providing support to house prices.

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