In today's autumn budget the chancellor Philip Hammond announced, to cheers from MPs and much media fanfare, that the government would be abolishing stamp duty for most first-time buyers in England and Wales, a policy that would come into effect immediately.
The change will apply to homes worth up to £300,000 and anyone buying a property worth up to £500,000 will also not have to pay the tax on the first £300,000, effectively saving first-timers about £5,000. Hammond said it would help 95% of first-time buyers, particularly those in areas like London where property prices are out of control.
If, like most young people, you've never had to deal with the nitty-gritty of buying a property, stamp duty is a tax levied whenever you buy a property over a certain value in England, Wales and Northern Ireland. The amount varies across the UK and depending on whether or not you're a first-time buyer and whether it's a residential or mixed-use property. Previously, the starting point for paying it in England was £125,000, meaning the average first-time buyer in the UK would have to hand over about £1,660 on a property worth £208,000, the BBC reported.
The government also made another big housing announcement, pledging £44bn worth of investment for housing over the next five years, promising to build 300,000 new homes a year and making it easier for councils to build in areas that need housing most. This would be quite a feat, taking the housing supply to the highest level since the 1970s.
While the stamp duty cut will help many first-time buyers, it certainly won't benefit them across the board. Unlike another big new policy announcement from the budget – the millennial railcard for 26-30-year-olds, which we learned about yesterday – many believe it could harm the younger generation more than it helps them.
If you've got a £50k deposit and are buying a flat worth £300k, then the stamp duty cut will save you a vast £20ish a month on your mortgage. So that's the housing crisis over, then.
— Hugo Rifkind (@hugorifkind) November 22, 2017
Many pointed out that it mostly helps those already wealthy enough to think about buying a property and those with access to the Bank of Mum and Dad, rather than those on middle and low incomes trapped in the rental market and struggling to save for a deposit.
education can’t be free in case a rich person goes to university, and we can’t subsidise public transport in case a rich person takes a train. however, if you have tens of thousands of pounds spare for a deposit, here’s a £5k stamp duty tax cut
— Jon Stone (@joncstone) November 22, 2017
Stamp duty change: helps young people already wealthy enough to be thinking about house buying. And helps boost house prices which were in danger of falling. Great news, but not really for poor young people.
— Jonathan Haynes (@JonathanHaynes) November 22, 2017
Unaffordable house prices are the problem, not Stamp Duty. For most young people, the stamp duty cut will make little difference. But it will help the beneficiaries of the bank of mum and dad... #Budget2017
— Tom Kibasi (@TomKibasi) November 22, 2017
Even worse: many others pointed to a prediction from the Office for Budget Responsibility which said the change could cause house prices to rise by 0.3% next year, meaning that "the main gainers from the policy are people who already own property" – not so great for those not yet on the ladder.
IMPORTANT: OBR expects stamp duty cut for first-time buyers to INCREASE house prices...#budget2017 pic.twitter.com/wfGOhIT0z1
— Ben Chu (@BenChu_) November 22, 2017
Others suggested the policy was more about shoring up Tory support from younger people – among whom they've been haemorrhaging support recently – and gaining positive PR, rather than ensuring people across the UK can afford a roof over their heads. Nothing new there, then.
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