This week has seen changes to the UK budget that could make pathways to home ownership for 1st time buyers better than we’ve seen for a long time. As always we were given a few tit-bits of information prior to the budget being officially released by Chancellor Phillip Hammond and these leaks made us hopeful that this time around the Government was going to aim to tackle the ongoing housing issues that have blighted this country for years.
The younger generation have in recent decades become dismayed that the prospect of being able to get onto the property ladder has become an unachievable dream for them. This year, massive changes to the key policy on Stamp Duty for First Time Buyers, could mean that home ownership becomes a very real possibility for many.
Effective from the 22nd of November 2017 if first time buyers are purchasing a property for up to £500,000 there will now be no charge on the first £300,000.
To qualify as a first time buyer you need to have never owned a freehold or leasehold share in a property before and be purchasing your only or main residence. All residential property, regardless of its location in the world, will be counted when deciding whether you are a first-time buyer or not. If you are purchasing your property with somebody else, then all purchasers must be first time buyers.
In practical terms, this means that you will pay £5,000 less if you’re buying a property between £300,000 and £500,000.
See our handy table below for the costs of stamp duty before and after this new budget had been released.
|Property Price||Stamp Duty Before Budget||Stamp Duty After Budget|
|£208,000 (average property price for first time buyers)||£1,660||£0|
|£410,000 (average property price in London for first time buyers)||£10,500||£5,500|
|Above £500,000||Stamp duty is unchanged|
The savings that can now be made on buying your first property could well be the difference between buying a property or not for many people, especially in high demand areas like London. This bill for the average first time buyer in London will be nearly halved and this provides many people with encouragement that the dream of property ownership has been made somewhat easier to achieve.
Obviously, this change isn’t helpful for people who already own their home and would like to move. These people are increasingly being put off moving due to the rising costs. Downsizers are important to the system as moving for the last time and freeing up valuable housing stock will help unblock the housing market. It might be useful for the government to look at ways to encourage people who would like to downsize.
But this is a welcome move, and gives us hope that the government are looking at real ways to deal with the more serious issues facing the housing market.
If you’re a first time buyer and would like to consider your options following this new change, please do give us a call today.