Will the reduction in stamp duty for first-time buyers have the desired effect?

Will the reduction in stamp duty for first-time buyers have the desired effect?

One of the most talked about announcements from the recent Autumn Budget has been the reduction in stamp duty for all first-time buyers.

Taking effect immediately, any first-time buyer purchasing a home up to a value of £300K will be exempt from the tax. And in London, a first-time buyer will receive the same reduction on the first £300K of any home costing up to £500K.

The government is hoping that that this change will benefit around 95% of first-time buyers over the coming years with 80% expected to pay no stamp duty at all.

Commenting on this announcement, Miles Shipside, director and housing market analyst at Rightmove, said: “Speed and getting in early is important for aspiring first-time buyers because supply of suitable properties is limited due to insufficient numbers of new-build property in this sector over the last decade.”

Overall there has been a mixed reaction to the announcement by analysts. While many are behind the move, the government’s own Office for Budget Responsibility (OBR) have said that this move could make house prices rise further and make it more expensive for first-time buyers in the long-run. The OBR claims: “The main gainers from the policy are people who already own property, not the first-time buyers. While the need for lower savings will be a boon for first-time buyers, the expected rise in prices could counteract any potential gains.”

It will be interesting to see who is proved right over the forthcoming months…