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Stamp Duty Holiday Closure Shouldn’t Deter First Time Buyers

by Alison Feemantle

The stamp duty holiday finally came to an end on the 24th March 2012 and buyers will now have to pay tax at 1% on properties priced between £125,000 and £250,000. The window, which had had been credited with much of the positive aspects in recent property figures is believed to have saved purchasers some £300m and economists are awaiting the impact of its closure with some trepidation.

While some property experts believed that purchases had slowed down prior to the closing of the window, figures revealed today by the Council of Mortgage Lenders (CML) prove that this was far from being the case.

The CML revealed that the number of first time buyers had increased by a significant 23% in January compared with the same month in 2011 and that resulted in £1.6 billion being approved for 13,200 new loans.

In addition, the UK’s biggest HomeBuy agents revealed that a record number of purchases went through on Friday the 23rd of March, the final day of the stamp duty window, with 129 transactions being recorded.

All of these figures will undoubtedly lead to a spike in property statistics for the first quarter of the year but does it mean that we are heading for a period of gloom as some economists are predicting?

Chris Smith, group direct mortgage manager of the Yorkshire Building Society revealed that his organisation increased its lending to first time buyers in 2011 and he believes that there are still plenty of market options open to them.

“FTBs are important to us – the proportion of our loans to FTBs is seven per cent higher than the market average,” Mr Smith said.

As for the Government, the First Buy Guarantee scheme has been introduced in the hope that it will be more of an incentive for first time buyers than the stamp duty holiday. The scheme is open to FTB’s with a household income of less than £60,000 who can raise a 5% deposit but many industry experts are critical. The initiative was been described in some quarters as ‘window dressing’ amidst allegations that it has an ulterior motive of helping the ailing construction industry.

“This is a very appealing prospect, but Osborne’s scheme won’t go beyond scratching the surface of the problem faced by the vast majority of first-time buyers, as it is exclusively for new-build properties and only around 11,000 buyers will benefit – a fraction of the overall number of potential first-timers,” said Nicholas Leeming of

“While the availability of credit is slowly easing, it’s not easing fast enough to help those borrowers who don’t qualify. A step in the right direction these measures may be, but they’re merely window dressing the wider problem.”

One window has closed but has another opened? The remaining nine months of the year will only begin to tell what impact the stamp duty reintroduction and the First Buy Guarantee will have.

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