Millions of first time buyers will not qualify for stamp duty relief if prices keep rising
Millions of first time buyers could no longer qualify for stamp duty relief by 2028 due to rising prices putting them beyond the minimum rates, it is suggested.
Some four million homes across England will fall outside the current cut off point that first time buyers start paying the property tax if prices continue to rise at the same level, according to research from L&C.
The study also suggests that first time buyers are conscious of this and 21% said that they have changed the area they intended to buy in so that they can avoid paying stamp duty which kicks in at £300,000.
While in London where prices are so much higher, some 37% have done so. In London first time buyers pay nothing on the first £300,000 of a purchase price of a home up to £500,000 and less on the difference.
The research looked at the best locations for stamp duty. In Southampton 88% of sales are between £125,000 and £500,000 while in Norwich and Bristol it is 87% and in Portsmouth 80%. Only 57% of property sales in London fall between these thresholds, as two fifths of sales are over £500,000 and are not eligible.
Over half of first time buyers questioned for the research said they felt it is unfair that buyers in some areas of England will benefit more than others from stamp duty relief, while 31% admitted that they don’t know if they’ll benefit from stamp duty relief when they buy their first home.
L&C’s calculations reveal that out of 100,000 recent property sales in line to benefit from stamp duty relief, 30,000 will no longer qualify in the next 10 years while in London more than half of the 52,002 properties that currently qualify for the first time buyer stamp duty exemption will no longer benefit in 10 years’ time.
In contrast, Nottingham will have the most properties within the exemption bracket over the next 10 years, with the proportion of properties that could benefit from a stamp duty discount rising from 51% today to 73% by 2028.
‘It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in 10 years’ time,’ said David Hollingworth from L&C.
‘As a priority the Government needs to ensure that there is a plan in place to review stamp duty relief bands, to guarantee sustained support for would be home owners now and in the future,’ he pointed out.
‘Going even further, abolishing stamp duty for first time buyers altogether would help all those looking to get on the ladder, with one less expense to worry about,’ he added.
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