Millions of first-time buyers could be stung for stamp duty in the next decade as rising house prices push their homes beyond the exemption threshold.
L&C Mortgages has investigated how many homes are or will be priced below the £500,000 stamp duty relief ceiling in the next ten years and discovered four million properties could be affected.
The news will come as yet another blow to many prospective first-time buyers who are already facing barriers to buying their first property.
In the 2017 Autumn Budget the Government announced it would be axing stamp duty for first-time buyers on the first £300,000 of any home costing up to £500,000.
Yet, L&C’s research suggests that with house prices soaring many of the homes being sought by first-time buyers could be priced out of this benefit by 2028.
Best and worst locations
London will be worst hit by the price rises, with over half of the 52,002 properties which currently qualify for a stamp duty cuts for first-time buyers being priced out.
It means the total proportion of homes which would benefit from the stamp duty cut would plummet from 57% to 28% in the capital.
In Brighton a third of the properties which would currently be eligible for stamp duty exemption are forecast to face the tax in the next ten years.
Nottingham, however, is the place to buy if you want more certainty around stamp duty cuts. The city should have the most houses below the threshold in the next decade, with properties which could receive a discount rising from 51% to 73%, according to L&C.
Areas such as Southampton, Norwich, Bristol and Plymouth have all been identified in the analysis as the best places to buy at the moment for those who wants to avoid stamp duty. These cities have the largest proportion of property sales between £125,000 and £500,000.
London, however, has the fewest homes below the stamp duty relief threshold. Just over two fifths of sales are over £500,000 and not applicable for the stamp duty cut.
As a result, said L&C, there is evidence many buyers are changing and buying homes in different areas.
Comment
David Hollingworth of L&C, said: “It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in ten years’ time.
“As a priority the Government needs to ensure that there is a plan in place to review Stamp Duty Land Tax (SDLT) relief bands to guarantee sustained support for would-be home owners now and in the future.”
He added: “Going even further abolishing stamp duty for first-time buyers altogether would help all those looking to get on the ladder, with one less expense to worry about.”
