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Scrapping stamp duty is only way to quickly rebuild housing market – Phillips

  • 16/09/2019
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Scrapping stamp duty is only way to quickly rebuild housing market – Phillips
Last month the Office for National Statistics revealed that a quarter of people aged 20-34 were still living at home with their parents.


The stats show that around 3.4 million young adults live with their parents, which marks a rise of 24 per cent on 10 years ago.

And while there could be a wide number of reasons for this surge in the number of people in their 20s and early 30s staying at home – including the fact that people are settling down later and having kids older – there is no doubt that the rise in house prices and rent is a factor.

In the past 10 years, the average house price has risen almost 60 per cent from £149,000 in 2009 to £238,000, while over the same period average rents have increased 26 per cent from £153 per week to £193.

The UK is facing a real crisis at the moment.

Clearly, there are not enough homes – not helped by the fact that there are more people living alone that ever before – and the ones that are available are often unaffordable to the young people looking to buy their own home.

This is exacerbated further by the fact that the stock of smaller homes is falling rapidly, with the latest statistics revealing that just nine per cent of new homes for sale are two-bedroom homes, compared to 17 per cent 20 years ago.


What is the answer?

Well, the problem with affordability is more down to the upfront costs than the ongoing costs.

Mortgage rates are low, so most people – once they have secured a mortgage – can generally afford to pay it, evidenced by the fact that arrears and repossessions are still at historic lows.

The main problem therefore is the rising cost of deposits and stamp duty.

Ultimately, if we want more people to be able to afford their own home, we need the government to reduce or change stamp duty, the first-time buyer incentive has worked and deposits are being increasingly helped thanks to the bank of mum and dad.

So, the quick fix would have to be lenders willing to offer bigger loan to values (LTVs), but we do not want to find ourselves back in dangerous 100 per cent and 110 per cent mortgage territory with Brexit around the corner.

The only thing that could happen now and have an immediate impact is an overhaul of stamp duty. We know that freezing it for first-time buyers has worked, so isn’t it time to scrap it for everyone?



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