Search

Budget 2017: What will stamp duty changes mean for housing market?

PUBLISHED: 10:00 23 November 2017

Budget 2017: The government has announced a reduction in stamp duty for first-time buyers. Picture: PA Images/Yui Mok

Budget 2017: The government has announced a reduction in stamp duty for first-time buyers. Picture: PA Images/Yui Mok

PA Archive/PA Images

A million first-time buyers are expected by the government to benefit from the stamp duty cut over the next five years - but experts have warned there could be unintended downsides for the housing market.

Chancellor Philip Hammond holding his red ministerial box outside 11 Downing Street before heading to the House of Commons to deliver his budget. Picture: Joe Giddens/PA WireChancellor Philip Hammond holding his red ministerial box outside 11 Downing Street before heading to the House of Commons to deliver his budget. Picture: Joe Giddens/PA Wire

When does stamp duty generally apply?

If you are buying property or land in England, Wales or Northern Ireland, you may need to pay stamp duty land tax (SDLT). The current threshold at which the change kicks in for homes is at £125,000. Stamp duty is set to be replaced in Wales in 2018.

What has changed in the Budget?

Stamp duty has been abolished for first-time buyers on homes under £300,000. First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000. They will pay the normal rates of stamp duty on the price above that. The relief applies if you, and anyone else you are buying with, is a first-time buyer. There will be no relief for those buying properties over £500,000.

How does the government say the change will help first-time buyers?

It says around a million first-time buyers will be helped over the coming five years, with £1,660 saved on the average first-time buyer property.

What do others say?

Some housing market experts predict that house sellers, knowing first-time buyers will no longer have to factor stamp duty into their costs, will be more bullish when pricing their own home and negotiate harder. It could also fuel demand in places where first-time buyer properties are already scarce – forcing house prices upwards. This could mean that while some first-time buyers no longer have stamp duty to pay, they end up having to pay a higher house price. The Office for Budget Responsibility (OBR) says the main gainers of the move will be existing home owners – and the impact will push house prices upwards. The OBR said the stamp duty tax cut was expected to boost the level of house prices by around 0.3% and most of the effect is expected to be in 2018. The relief would also distort the housing market for homes priced at around £500,000 the OBR has said. This could mean sales end up being bunched up at just below the £500,000 mark. The move could result in as few as 3,500 additional home purchases a year, according to the OBR.

What about other people trying to move who are not first-time buyers?

Some sellers of typical first-time buyer homes may now find it easier to move as they could have a wider choice of buyers. But housing market experts have said that people higher up the housing market chain, such as those looking to downsize, may still struggle to move as they will still have to pay the usual stamp duty rates.

When does the cut kick in?

It applies to people completing purchases on or after November 22.

How have buyers been reacting to the news?

There has been a mixed response.

Writing on Twitter, Rach@THFC_Rach said:

“#StampDuty Am I missing something? How is this helping young people buy a first home - if they couldn’t afford a £125,000 house with no stamp duty, what makes them be able to afford a £300,000 one now? Won’t prices go up now anyway?”

Michael Cowan‏ @mrmikecowan wrote: “#StampDuty concession doesn’t go far enough for those trying to buy in #London. It falls way short when average London house price £480k #Budget2017 #PhilipHammond.”

Latest Ilford Stories

Yesterday, 17:00

Sporting Bengal United will look to make it five games without defeat when they host the Motormen

Yesterday, 15:35

Anjem Choudary will be subject to a strict supervision regime after his release from prison later this week.

Yesterday, 15:00

Ex-O’s defender Darren Purse will be on the touchline against Leyton Orient’s under-18s in the FA Youth Cup this week

Yesterday, 14:00

The latest news from the Ilford Social Centre Darts League

Yesterday, 13:00

Letters from an aeroplane crash, relics from a national disaster and correspondence between long lost lovers.

Yesterday, 13:00

Linkside Tennis Club held a successful junior finals day despite steady, then torrential rain and a chilly wind on the weekend.

Yesterday, 12:00

A prolific blackmailer from Woodford Green who tried to force the CEO of a well known company to hand over £150,000 has been jailed for more than five years.

Yesterday, 12:00

Redbridge joint-manager Ricky Eaton says it’s great to see his side scoring again after sealing a comfortable 4-1 win against Southend Manor to progress in the FA Vase.

PROMOTED CONTENT

Struggling to find a buyer for your home in a slower market? We speak to Ilford property expert Nina Kaura from Portico about the Crossrail effect and why getting things right first time will get you the best price for your property.

Exchange Ilford is a shopping centre on a mission to make it a more welcoming and accessible place to the people of Redbridge.

An Ilford shoe retailer and podiatry practice is taking the next step with a move to a new shop just a few doors down.

Newsletter Sign Up

Ilford Recorder twice-weekly newsletter
Sign up to receive our regular email newsletter

Our Privacy Policy

Most read news

Show Job Lists

Education Promo

Digital Edition

cover

Enjoy the
Ilford Recorder
e-edition today

Subscribe

Education and Training

cover

Read the
Education and Training
e-edition today

Read Now