Survey suggests stamp duty is significant barrier for first time buyers
Would be first time buyers believe that not having to pay stamp duty would make buying a home more affordable as the property tax is a significant barrier to doing so, a new poll shows.
Some 60% of those looking to get on the housing ladder in the UK said paying no stamp duty would make it more likely they could buy their first home while 22% said it would not make a difference, according to the YouGov survey for Yorkshire Building Society.
The lender says that it is clear evidence that stamp duty needs to be reformed if the Government wants to encourage more first time buyers onto the housing ladder and it is calling for the tax to be paid by sellers rather than buyers.
The Yorkshire estimates such a reform would save first time buyers in the UK excluding Scotland, an average of £3,791 with buyers in London saving the most at an average of £13,171 as property is more expensive there.
The poll also found that 72% of potential first time buyers said paying for up-front costs including stamp duty would be difficult, 69% said saving for a deposit is difficult and 34% aid the monthly mortgage payments would be hard.
The research showed that 18% of potential first time buyers were not saving anything towards buying a home, and a further 52% saving less than £250 per month and the building society argues that this highlights the significance of stamp duty acting as a barrier to people achieving their home ownership aspirations.
It has urged the Government to include examining the switch in stamp duty as part of its formal submission on what should be included in the Chancellor’s Autumn Statement next week.
‘Saving enough to pay stamp duty adds to the overall difficulty of buying a home. It is hard enough for buyers to find the right property in the right location without the need to pay additional fees and taxes, given the scale of house price inflation in recent years,’ said Andrew McPhillips, chief economist at the Yorkshire Building Society.
‘The Government’s Housing White Paper will rightly outline plans to resolve the crisis faced by those unable to buy a home. But these will be long term ambitions and measures to ease the problems in the short term, including reforming stamp duty, should form part of the Government’s strategy,’ he explained.
‘Reducing any of the costs such as stamp duty for first time buyers and those moving up the ladder would help to make homes more affordable for many, enabling more people to realise their homeownership aspirations,’ he added.
Such a reform would leave downsizers, those existing home owners moving to a less expensive property, facing a higher stamp duty bill as part of the support for the younger generation.
However, the survey showed that only 37% of downsizers said such a reform would make them less likely to move, likely due to the significant amount of equity they have built up in the home as a result of historical house price inflation.
Aspiring home owners and those moving up the ladder were in favour of the reform suggested by Yorkshire Building Society, with only 9% and 13% of each group saying they opposed such a move.
Just over a third of upsizers said they would be more likely to move as a result of such a change, with only 2% saying they would be less likely to move.