Stamp Duty Blow to First-Time Buyers

The Chancellor has been accused of failing to recognise the severity of the first-time buyer crisis, by not extending stamp duty relief beyond March 2012.

Whilst the Government is trying to breathe new life into the ailing housing market, George Osborne has been criticised for not doing enough by boosting house building in the UK and the first-time buyer market.

Peter Spencer, chief economist to the Ernst & Young ITEM Club, said: “One area where the chancellor fell short of expectations was making the housing market more accessible to first-time buyers. The stamp duty tax relief will end in March 2012 as planned and there were no further measures along the lines of guaranteeing bank loans to first-time buyers.”

“Osborne gives with one hand, and takes away with the other,” said Peter Rollings, chief executive of estate agent Marsh & Parsons. “The failure to extend the holiday for first-time buyers will undermine the government’s own attempts to kick start the first-time buyer market across the country. While the new mortgage indemnity scheme may improve the accessibility of mortgage finance to many credit-worthy borrowers, first-time buyers will need to save for longer to pay the stamp duty bill as they move.”

Such kick start schemes include the revival of the right to buy scheme first launched in the 1980s.  Under the scheme, two million council houses could be available to buy by tenants.  Osborne has hailed it as “one of the greatest social policies of all time” that had been “slowly and stealthily strangled” by the previous Government.  Under the scheme, families will be offered discounts of up to 50% on the market value of the property.  The profits made from the sale of council houses will be used to build a new affordable home for each council house purchased.

“It will take three to five years for the newly built properties to come onto the market,” said Robin King, director at property firm Move With Us. “If there is a sudden large uptake of buyers, how does the government plan to address the lack of available housing? Social housing is often built in ‘uneconomic sites’, in areas that will struggle to attract buyers. Will this help to regenerate deprived areas, or will we end up with an oversupply of properties that cannot be sold?”

John Longworth, director general of the British Chambers of Commerce, said: “In cities and towns across England, regeneration projects are stalled, with a serious impact on local business confidence. The £400m Get Britain Building fund will help unlock progress on some of these sites, which will have a positive impact on a wide range of local companies involved in construction and its supply chains. Ministers must speed the fund’s implementation so we see more spades in the ground quickly.”