Stamp duty reductions are being introduced for people in England and Northern Ireland buying their first home through a shared ownership scheme.
They will not pay the property tax on shared ownership homes that cost up to £500,000 with the measure being back dated to the reduction announced a year ago for first time buyers.
That means that first time buyers who bought through shared ownership since 22 November 2017 will get a refund of the stamp duty paid, it was confirmed in the Budget.
But the change and the refunds only apply to buyers in England and Northern Ireland. It may be that the devolved Governments in Scotland and Wales will make a similar announcement in due course.
The Government has also announced a consultation into proposals from private investors, delivery organisations or partnerships to provide new routes into affordable home ownership.
‘Shared ownership is already helping a significant number of people and at present there are around 180,000 shared owners in England. The model enables individuals who do not have the means to buy a home outright to buy a share of the home,’ the consultation document says.
‘As we work towards creating a housing market that works for everyone we believe shared ownership has an important role to play in creating a modern, diverse and thriving housing market. The Government is committed to supporting innovation in the housing market, in particular improving and expanding the existing shared ownership offer,’ it adds.
This consultation is open until 01 February 2019.
The stamp duty change will help more people onto the housing ladder, according to Grainne Gilmore, head of UK residential research at Knight Frank. ‘It was an unusual move by the Chancellor to backdate his decision, which will mean thousands of extra new homeowners will also receive a surprise rebate,’ she said.
But Mark Hayward, chief executive of the National Association of Estate Agents (NAEA), thinks it will not have much of an impact. ‘When the Government announced a stamp duty holiday for buyers in last year’s Budget, we said that it was a sticking plaster which did not tackle the wider problem of rising house prices, lack of affordable housing and supply of suitable homes in the UK,’ he said.
‘The news that this relief is being extended retrospectively to include first time buyers in shared ownership properties is unlikely to have any material impact. Our data shows that so far this year 26% of property transactions involved first time buyers. This was the same figure as that for the whole of 2017, showing that it hasn’t had a real impact so far, and therefore is unlikely to make a real difference moving forwards,’ he explained.
‘Instead of focusing solely on those buying their first home, the Government needs to look at the whole system to ensure it’s working effectively for all buyers, and there are suitable homes for everyone,’ he added.
Helen Morrissey, spokesperson at Royal London, also believes that more needs to be done to make the housing market more liquid. ‘While first time buyers can buy a home what of those further up the ladder who cannot afford to either move to a larger home to accommodate their growing families or those looking to downsize? We would urge the government to look at reliefs for those further up the housing ladder if we really want to free up the housing market,’ she said.
Ishaan Malhi, chief executive of Trussle, pointed out that when the Chancellor introduced the policy last year it split opinion, with some believing that this would lead to higher house prices. ‘This doesn’t appear to have happened and it’s difficult to argue with the numbers, with more than 121,000 people benefitting so far,’ he said.
‘The Government’s decision to increase the threshold from £300,000 to £500,000 will also make a huge difference to first-time buyers in the most expensive parts of the UK, like London, where the average house price is just shy of this total,’ he added.
It is also positive that the Government is recognising the place of shared ownership in the housing market, according to Kevin Roberts, director of the Legal & General Mortgage Club.
‘The Government clearly recognises the benefits of shared ownership as a genuine option for individuals, couples and families who want to become home owners. Hopefully, this exemption will now bring about even more awareness of the scheme and make it as widely recognised as other high profile tenures such as Help to Buy,’ he said.
