The temporary tax exemption for FTBs purchasing homes worth up to £250,000 is due to end in March, after which buyers will have to pay 1% tax on properties bought for £125,000 or more.
Experts are calling on the government to extend the FTB concession.
Bernard Clarke at the Council of Mortgage Lenders said: “With FTB purchases having slumped by almost two-thirds in the last decade, the cost of extending it would be relatively small.
“But it makes a big difference to individual buyers at a time when confidence is fragile. We are concerned that it may result in a decline in first-time buyer activity in the spring when we would normally hope to see it pick up.”
Peter Bolton King, chief executive of the National Association of Estate Agents, added: “It is vital any support for this fragile part of the market is not removed. The government should be doing everything it can to help.”
Charles Haresnape, managing director of Aldermore Residential Mortgages, said the CML was right to call for the tax break to be extended: “The cost to the government would be minor in comparison to the benefit it would offer home buyers on tight budgets.
“I believe it’s incumbent on both government and lenders to do everything possible to help first-time buyers and we need to see more being done to help this important sector of the market.”
