34 UK PROPERTY INVESTMENTS


MY PROPERTY, MY HOME 1 APRIL 2018


First-time buyers enjoy the stamp duty benefit


Last November, chancellor Philip Hammond abolished stamp duty on homes costing less than £300k, with reduced rates up to £500k. This was all part of a group of measures designed to help first-time buyers get a foot on the housing ladder. Grahame Anderson looks at the benefits brought about by the recent change in law


According to the Halifax £1,700 is the amount of stamp duty previously payable on the average property secured by first- time buyers. Naturally, the chancellor was keen to promote this as a substantial saving. Previously, the tax was paid on all purchases of more than £125k. We also know, of course, the majority of mortgages require the borrower to provide a minimum proportion of the purchase price. This might be as low as 5% or as high as 10% in some cases. Market experts believe the change to


stamp duty land tax (SDLT) will save four out of five first-time buyers up to £5k. As result, this saving on monies earmarked


for the property tax can now be used for the deposit. It could also help increase the amount borrowed, enabling many to buy a home that was previously out of their price bracket. The Office for Budget Responsibility,


however, has since pointed out while this is true for many, for some people it’s likely that any stamp duty saving would be more than offset by increased house prices. But, there’s another side to the argument. In fact, The Institute for Fiscal Studies was at pains to point out that while house prices might have risen, this type of buyer would end up with a more valuable asset in the longer term, as a result of the new stamp duty policy. “The move has certainly


created increased interest from purchasers who’d previously felt unable to take the first step on to


the property ladder, especially in the capital,” says Jeff Bathija, Andrews area manager for London. “It has, however, created a gap in the market whereby properties priced slightly upwards of £500k (in the £520-£540k region) are now being reduced by vendors to below £500k, in order to capitalise on interest from first-time buyers. “While this may prove to be a positive


move for some vendors, the danger lies in the property then being sold for under its natural market value. But it’s too early to draw any firm conclusions as yet.”


BUCKING THE TREND Jonathan Stephens, founder and MD of Surrenden Invest, has certainly witnessed positive benefits. He says: “We’ve been selling an increasing number of properties in the UK’s major cities to first-time buyers over the last three to four months, and in light of this new ruling on stamp duty, expect to do so even more in the coming months and years. For our other clients, the buy-to-let investors, the worry that a stamp duty gift to first-time buyers would be at their expense


In the days following the budget, savvy first-time buyers, who’d waited to hear the announcements in the budget, got in touch to take advantage of the windfall


IMAGES: GETTY


hasn’t materialised, which will of course be a great relief.” Some developers are using changes in


stamp duty in an innovative way to market their properties priced at just below the threshold. In order to attract potential buyers, agents are offering to pay all the stamp duty on The Currell boutique project on Hertford Road N1, to help first-time buyers indirectly. In this sense, it’s worth doing your homework before taking the plunge. Simon Halfhide, sales director at Redrow


London, commented: “The positive impact the abolition of stamp duty has had on first-time buyers has become immediately apparent at our Lyon Square development in Harrow. In the days following the budget, savvy first-time buyers, who’d waited to hear the announcements in the budget, got in touch to take advantage of the windfall. “In December, you normally tend to see


a slowdown in the market, but 2017 really bucked the trend. Looking at the numbers year-on-year in the month of December, we saw a 200% increase in the number of sales at Lyon Square, and now we’re well into 2018 we’re seeing no sign of this stopping. The combination of Help to Buy and the cut to stamp duty is propelling people onto the housing market who’d previously teetered on the edge of being able to afford to purchase.” But remember — first-time buyers


purchasing a property for more than £500k won’t be entitled to any relief and will pay SDLT at the normal rates. Rob Houghton, CEO of reallymoving.com,


offers a final analysis, stating: “More than 50,000 first-time buyers used reallymoving’s services in 2017, a record high, and the trend is still upward. The government’s incentive on reduced stamp duty for those who haven’t previously purchased a property should give first-time buyers a serious head start. Without question, 2018 is shaping up to be the year for the first-time buyer.”


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