Will First-time Buyers Really Benefit From The Stamp Duty Cut?

Whathouse.com has undertaken an online survey to find out how today’s house-hunters have reacted to one of the major headlines from the Autumn Budget 2017: the abolition of stamp duty for most first-time buyers.

Stamp duty starts on prices from £125,000 at 2%, then increases at £250,000 to 5%, up to the £925,000 price mark. On a home of £300,000, the stamp duty bill is £5,000 to homeowners moving on, but now zero to those buying their first home - a substantial saving.

Of over 400 respondents, 84.3% are first-time buyers (FTBs) of whom 31.6% say that Chancellor Philip Hammond’s announcement of the immediate removal of stamp duty for property purchases up to £300,000 in England and Wales (or the first £300,000 of a purchase up to £500,000) will have no effect on their purchase at all.

By far the biggest reaction was for the time it takes to saver and purchase for a first home and the costs of doing so, with 37.9% of the first-time buyers saying that the change would mean they could buy sooner than they thought before.

Interestingly, though many will have a much lower overall bill for moving, only 4.9% of FTBs felt that they would be able to ‘save less and spend more’ of their income. This may reflect the other outgoings that they’ll need and want to save for, such as legal costs, furniture and decoration.

Alternatively, it may mean that the money will go towards the price of the home itself: nearly 15% say they’ll ‘raise the budget’ on the price of the home they can afford to buy, and 8% of those surveyed believing the government’s new policy will mean they can look to move into a ‘better area’ - no doubt one where that saving on stamp duty will be spent on a higher-priced property.

When it comes to borrowing, just 8% of respondents thought that saving on stamp duty would lead to a smaller mortgage - clearly putting their savings to another use than increasing their deposit. One in 20 said they would no longer be borrowing from the ‘Bank of Mum and Dad’, which may please the parents as much as the child.