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Budget 2020: Disappointment over stamp duty and first-time buyers – industry response  

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  • 11/03/2020
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Budget 2020: Disappointment over stamp duty and first-time buyers – industry response  
Industry critics have expressed disappointment that there were no initiatives announced to help first-time buyers and replace Help to Buy, or plans to reform stamp duty in the 2020 Budget.

 

It had widely been hoped the chancellor Rishi Sunak would do more to help borrowers get on to the housing ladder.

The Help To Buy to scheme is set to end in 2023 and its feared the industry could suffer if there is no additional measures to help first-time buyers.

David Copland, director of mortgage services at TMA, said: “Disappointingly, today’s Budget does not bring new hope to first-time buyers.

“With the Help to Buy equity loan scheme set to end in 2023, and no replacement initiative in place, more still needs to be done for ‘could-be buyers’ to help them onto the property ladder.

“While today’s Budget tackled current wider economic challenges, it’s key that the government prioritises bringing in measures to support this community over the next 12 months.”

Vikki Jefferies, proposition director at Primis Mortgage Network, agreed the government needs to address the issue of first-time buyers.

She said: “A new form of financial support is still needed to ensure future homeowners aren’t locked out of the market. This should keep the level of first-time buyer activity on the up, all the while reassuring this pool of borrowers that the government is backing them.”

 

‘Dismay’ over stamp duty inaction

Many critics had also called for a change to the stamp duty system to help boost housing transactions and movement within the market.

Sunak introduced a new surcharge of two per cent for non-resident buyers, but failed to make any other changes to the levy.

Richard Donnell, director of research and insight at Zoopla, said:  “With stamp duty lining the Treasury’s coffers to the tune of £8.3bn as of March 2019, up from £2.7bn ten years’ ago, it was always unlikely that the chancellor would consider a significant stamp duty reform – particularly without an alternative source of revenue.

“Stamp Duty has become a southern tax, and is widely regarded as one of the biggest inhibitors to market liquidity in London and the South East – from which 61 per cent of its receipts are generated. In keeping the tax bands unchanged and not in line with price inflation, 2.7m homes have been pushed into the five per cent band since 2015.”

John Phillips, national operations director at Just Mortgages, added: “As the Institute for Fiscal Studies has said, stamp duty is a tax on transactions, pure and simple, which freezes up the market and means people don’t get to live in homes that meet their needs.”

Copland said the lack of action on stamp duty would be “met by many with dismay”.

He added: “This tax is punitive for many would-be buyers, adding thousands of pounds onto the upfront cost of a home purchase.

“In the coming months, I hope to see an extensive government review of the current stamp duty rules for first-time buyers – and potentially even downsizers.

“This should help restore market activity, freeing up much needed housing stock, and helping more borrowers take their first steps on the housing ladder, without facing a wave of extra costs.”

 

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