Chancellor Hammond’s 2017 Budget delivered an array of changes for the property industry, and the most contentious of those is arguably the change to stamp duty. The cornerstone of his property package was to abolish stamp duty on first time buyer properties costing from £125k to £300k, while those purchasing homes costing up to £500k will not pay stamp duty on the first £300k. There have been mixed reactions, with some industry experts welcoming the news while others express concerns.
When consumers save money, it’s generally considered good news. In this case, the immediate effect of the changes means that those currently in the process of buying, and those who intend to buy, may indeed save money. In areas where property prices have been pushed up by demand, this measure could save first time buyers up to £5,000. This saving is enough to significantly affect the amount of people who can now afford to step into the property market, or help those who need funds to redecorate, or ease the burden of those trying to save for a deposit.
However, the measure does not assist those in areas where average property prices are listed for under the £125k threshold – such as in Northern Ireland. The economic situation of those purchasing these houses priced under the threshold will not be improved by the new measure.
Similarly, first time buyers in the north will save approximately £24 based on average house prices. First time buyers in Wales, Yorkshire, the Humber and the north west will be less than £500 better off.
Savings are more substantial in the south west and East Anglia at just over £1,600, and the south east saves over double that, at £3,948 on average.
As a measure to improve affordability, only a particular cross section of the population will benefit from this measure, therefore it cannot be said that it will increase affordability across the nation. Those who are not first time buyers will not benefit from the stamp duty changes, whether they are movers or investors. Nor will those who currently struggle to accumulate the thousands needed for the deposit while simultaneously paying rent. For many others who do qualify, savings may be negligible.
In addition, the government’s own watchdog, the Office for Budget Responsibility (OBR) has predicted the change will increase house prices nationally by 0.3% in the next 12 months. This is because the stamp duty changes will cause more first time buyers to enter the market but housing supply is unlikely to meet the demand. This will vary on a regional level, where local economic factors affect the local property market.
First time buyers may want to to take advantage of any potential stamp duty changes before the increased demand for housing pushes up prices, eating into the potential saving. Agents can assist their first time buyers by using the latest research data to inform their marketing, selling and customer service strategies.
ZPG’s First Time Buyers 2017 report is packed full of insights and trends affecting first time buyers across the nation. Our research has uncovered the full first time buyer journey, including the consistent and central role that property portals have to play in that journey. We’ve discovered the top purchasing triggers of your customers, the personal criteria they apply to potential houses, and how estate agents who provide a positive service experience to the renters of today can benefit when they become first time buyers of tomorrow.