Now that the dust has settled on the Autumn Budget, people are beginning to come to terms with the impact of the Autumn Budget stamp duty cut. This move, which sees the removal of stamp duty for first time buyers purchasing a home below £300,000, was initially heralded as a great boost for first time buyers. However, there have been complaints levelled at the cut, with some sources saying that this is likely to increase the price of property.
As is so often the case with issues in the property market, there is no clear cut change to the market. Some people will benefit, some people will likely become worse off and many people will be unaffected by the change.
On the surface, the removal of stamp duty for first time buyers purchasing property at less than £300,000 is a good thing. As is the change that will see the first £300,000 of purchases between £300,000 and £500,000 being overlooked for first time buyers. While some people will say that this is primarily aimed at the London property market, these changes should ensure that the vast majority of first time buyers should receive a helping hand.
The initial criticism of the cut came from the Office for Budget Responsibility. The organisation said this move would see property prices rise by 0.03% which would likely remove any benefit or saving a first time buyer could obtain. If this turns out to be true, you can see why many people will decide that the stamp duty cut isn’t too helpful for first time buyers. In fact, there have been people pointing out that the change is likely to be more appealing to current property owners as opposed to people looking to get on to the property ladder.
Even if the saving from stamp duty being cut is balanced out by an increase in property prices, there should be a benefit to first time buyers. This is because the up-front cost of the property will be lowered, which means that the money which would have been used for stamp duty can now be allocated to the deposit.
Given that the deposit is one of the most important aspects in obtaining a mortgage, this should be a positive factor in the market for many. Having a larger deposit can help people to obtain a more attractive mortgage offer and it may even make the difference in being offered a mortgage or not. It is likely that this change will have a positive impact on people who have been struggling to save a deposit or who have low income levels. These are people who need assistance in getting on to the property ladder and you can see why this move is likely to have a positive impact.
Returning to the idea that current property owners will benefit from the stamp duty cut, this is only true when they are looking to sell. If the property owner is then looking to buy property, any benefit they gained from a higher selling price is likely to be cancelled out through the need to pay more for their next property.
At this point in time, it is difficult to say what the full extent of the Autumn stamp duty cut will be. There are concerns that property prices will rise but there is hope that first time buyers will find it easier to save for a deposit and obtain a mortgage. Whatever assistance or guidance you require in the property market, get in touch with Griffin Residential and we will be happy to help.