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Darling’s final duty? The Chancellor’s last budget before the general election included the dramatic news that the stamp duty threshold for firsttime buyers will rise from £125,000 to £250,000. The rise in the threshold follows the successful stamp duty holiday on properties worth between £125,000 and £175,000 that ended last year. This was seen as a key driver in improved transaction rates at the end of last year. However, the news may not help as many potential homeowners as the government has initially indicated. The Council of Mortgage Lenders (CML) points to confusion surrounding the definition of first-time buyers. It says that many first-time buyers are in reality returning buyers who have rented for a period. But according to the HMRC’s strict definition of first-time buyers this group is unlikely to benefit from this latest stamp duty concession. The CML points out that the HMRC guidance says the first time buyer must not “have previously acquired a major interest in ...residential property....anywhere in the world". The CML says this may be difficult to verify and instead calls on the chancellor to create a far simpler concession of exempting all properties worth less than £250,000 from stamp duty. The body estimates that around 136,000 first time buyers may still be exempt from stamp duty. However, the figure would have been more than double this if the concession were available to all buyers including those who are selling a property. The government is planning to pay for this stamp duty holiday for first-time buyers by increasing stamp duty tax from 4% to 5% on properties worth more than £1m from next year. CML director general Michael Coogan said: "The Budget offers a modest potential boost to the housing
and mortgage market in terms of reducing transaction costs for first-time buyers, and potentially improving efficiencies for lenders. “But as always the devil is
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“As long as they’re happy, the rest of the market tends to be happy, that’s why the new 5% stamp duty rate on £1million properties is a sideshow”
in the detail, and the detail is confused. The stamp duty concession in particular looks like a tax loophole waiting to happen.” Others are less critical of the stamp duty announcement. Paul Smith, chief executive of estate agency chain Spicerhaart said: “First-time buyers are the lifeblood of the industry and the wider economy. The new stamp duty threshold is set to strengthen the UK property market more so than any other (recent) government initiative. “This new measure is of national significance as it will substantially increase the number of first-time buyers coming into the property market, giving the rest of the market a much needed boost and mitigate any negative effects that the recent rise in stamp duty has had after the cessation of the stamp duty holiday.” He added that the changes to stamp duty would be “particularly helpful to those trying to get on the ladder in London and the south east of England where property prices are significantly higher.” He also warns that firsttime buyers will continue to
Good news for the property market?
struggle to save the large deposit needed to secure a home. He added: “The average firsttime buyer needs a 15% deposit before they can purchase their property, which is still unaffordable for most. The gov-
ernment should either help decrease the amount of deposit required or assist first-time buyers with finding funding through lending institutions.” David Whittaker, managing director of Mortgages for Busi-
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ness, is another to welcome the stamp duty announcement and call for further help to improve lending. He described first-time buyers as “the fuel that keeps the mortgage market alive.” He added: “As long as they’re
happy, the rest of the market tends to be happy, that’s why the new 5% stamp duty rate on £1m properties is a sideshow. Increased demand at the entrylevel end of the market helps to strengthen prices. “
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