Stamp duty is to be abolished for 80% of first time buyers, according to Chancellor Phillip Hammond’s autumn budget announcement.
The change, which is effective immediately, will be abolished for first time buyers buying homes of up to £300,000.
Those purchasing properties worth up to £500,000 will pay no tax on the first £300,000 of the property’s value.
THE RABBIT IS OUT OF THE HAT. For all first time buyers, buying up to £300,000 from TODAY he is abolishing stamp duty altogether. And if buying £300,000 - £500,000 you only pay it on the final £200,000.#budget2017
— Martin Lewis (@MartinSLewis) November 22, 2017
According to the Chancellor, this will see a reduction in stamp duty costs for 95% of first time buyers while 80% will pay no stamp duty at all.
The Treasury also predicts that the change will save some first time buyers as much as £5,000 during the home buying process.
Philip Hammond added: “This is our plan to deliver on the pledge we have made to the next generation that the dream of homeownership will become a reality in this country once again.”
However, the Office for Budget Responsibility has said that the move could boost house prices by around 0.3%, making it harder for first time buyers to save the deposit they need.
Actually the OBR says that First Time Buyers will be made worse off post Stamp Duty because it assumes that property prices will rise by twice the amount of this permanent cut
— Faisal Islam (@faisalislam) November 22, 2017
This could be good news for those who already own property, as their homes will be worth more.
Property expert, Simon Heawood said: “While welcome, abolishing stamp duty is a drop in the ocean given the affordability challenge of getting Generation Rent onto the property ladder.
“The focus on bridging the housing generational gap must lie on the all-important first rung of the ladder - saving up for a deposit. The issue of housing supply and price is important, but looking at measures to support Generation Rent’s ability to get together a deposit is crucial.”
