There had been some hope that the current stamp duty holiday for first timers buying property up to £250,000 which ends on Saturday might be continued.
Experts described the decision not to do something more for first time buyers as a missed opportunity. According to Steven Lees, director at SmartNewHomes, it would have helped those who need it most. ‘Approximately 150,000 new buyers benefitted from the tax break since the holiday began two years ago, which has enabled transactions all the way up the chain and helped keep the market moving,’ he said.
‘We now expect to see many more house builders stepping into the fold, continuing the Stamp Duty holiday and reducing costs as much as possible for first time buyers,’ he added.
Nicholas Leeming, business development director at Zoopla said that the government believes the stamp duty holiday has not been significant in encouraging first time buyers into the property market and that is why they are scrapping it, but he reckons that there are a number of other factors which have prevented the surge of buyers the government was originally hoping for.
‘High inflation, low savings rates and strict lending criteria have all contributed to low first time buyer numbers, but these are starting to ease. Inflation is falling, and lenders are becoming more flexible in their criteria so now is not the time to throw another obstacle onto the tracks,’ he explained.
He reckons that over the last two years the taxman has missed out on just £650 million from first time buyers who have bought within the £250,000 threshold but the 5% rate on properties over £1 million, introduced at the last budget, has pretty well covered this shortfall netting nearly £550 million in just twelve months.
‘Given the importance of first time buyers in providing the first link in the property chain, the government should be doing everything possible not to deter these buyers and allow them to energise the rest of the market,’ he said.
‘This will lead to a higher levels of activity further up the property ladder and, in turn, higher tax revenues to bolster the Treasury’s coffers. However, it appears that the Government is focusing on a short term strategy and while initiatives such as the NewBuy scheme are intended to compensate, in reality this will only help a small number of buyers and do little to assist the property market as a whole,’ he added.
It is also expected to affect the property market in Scotland. ‘Whilst the housing market has picked up significantly over the last year, the government cannot be complacent about the continuing need to help young buyers, a move which will drive growth in the rest of the sector,’ said Bob Cherry, a residential partner at CKD Galbraith.
