UK Property First Time Buyers Get Stamp Duty Boost From Government
First time buyers keen to get on the property ladder have been given a boost by the Chancellor, Alistair Darling, after he announced he was scrapping Stamp Duty on homes up to the value of £250,000. In effect, this is worth up to £2,500 for first time buyers, and will be funded by a 5% increase in the duty on homes costing over £1 million.
The Chancellor said: “The housing market has now stabilised and has begun a slow recovery. But many first-time buyers, particularly those without large deposits, still find it hard to get a mortgage.
“I want to help them, but in a way that is properly funded.”
Only first time buyers – those who have never bought a property in the UK or abroad before – will be eligible for the tax break, which will be in effect for the next two years.
It is thought the new policy will benefit around 9 out of 10 first time buyers, based on the 136,000 who bought homes under the £250,000 threshold in 2009, according to figures by the Council of Mortgage Lenders. The average home in the UK currently costs £160,000.
The stamp duty levy stands at 1% for homes costing between £125,000 and £250,000 (for non first time buyers); 3% for properties valued between £250,000 and £500,000; 4% on properties valued at over £500,000 and 5% on properties over £1 million.
The tax holiday is likely to ease some of the pressure currently faced by young first time buyers who struggle to get onto the first rung of the property ladder, with difficulty in obtaining a mortgage and saving up a sizable deposit being the main issues faced.
The change in policy is predicted to stimulate a short term boost to the property market by encouraging first time buyers to make a purchase. “This rabbit from the hat is going to help get the property market moving again,” said Marios Gregori, a tax director at accountants PKF.
“Add in the prospect that interest rates are likely to stay low for a long time and that banks are being encouraged to increase lending to home buyers, and you have quite a favourable climate for a recovery in the residential property market.”
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