Budget more than doubles tax threshold to £300,000, effectively exempting 80% of all first-time property purchasers
One of the key measures in the chancellor’s drive to help young buyers get on to the property ladder could backfire by pushing up house prices, benefiting those who already own homes, the independent Office for Budget Responsibility has warned.
Philip Hammond announced the immediate abolition of stamp duty for all properties up to £300,000 bought by first-time buyers with immediate effect as part of a range of measures designed to address the UK’s housing crisis. The move will save four out of five first-time buyers up to £5,000.
Those spending up to £500,000 – including most buyers in London – will also benefit, as the first £300,000 of the purchase price will not be subject to the tax. Previously the tax was paid on all purchases over £125,000.
However, the OBR said the tax break was likely to push property prices up by about 0.3%, with most of the increase coming in 2018.
“The main gainers from the policy,” said the forecasting group, “are people who already own property, not the FTBs [first-time buyers] themselves.”
It added that some potential FTBs, with smaller deposits, would now be able to borrow a little more “allowing them to buy properties that they otherwise could not afford – but more expensively”.
Posted: Thu Nov 23, 2017 4:43 am