Ben Merritt, mortgage manager, Accord
The government’s changes to stamp duty in November 2017 were a welcome measure for many first-time buyers and I’m not sure it’s just a coincidence that we, and the rest of the market, are seeing an increasing number of people managing to get a foot on the property ladder.
Saving for a deposit, as well as all the legal fees and moving costs – and, previously, stamp duty – is no mean feat for FTBs who are often renting, or experiencing a high cost of living. Stamp duty previously took thousands of pounds out of most FTBs’ savings pots. Its removal for the majority of would-be homeowners enables them to add to their deposit or moving costs, and maybe to move sooner than planned.
Thanks to the various changes, the government estimates that 60,000 FTBs have benefited so far, and at Accord we’ve seen almost a 10 per cent year-on-year rise in FTB mortgage completions, which could indicate the withdrawal of stamp duty fees has been a positive move.
Last year, 365,000 new homeowners took their first step on to the property ladder, the highest number of FTBs since 2006.
The growth of intermediary lending across the whole market over the past two years has also risen, from 68 per cent in the final quarter of 2015 to 71 per cent in the same period in 2017.
In particular, more and more FTBs are turning to a broker, according to figures from UK Finance, most likely because applying for a mortgage and buying their own home is one of the biggest events someone will face in their adult lives.
The role of the broker in an FTB’s journey to homeownership cannot be understated. Legal & General’s recent research dem-onstrates borrowers rely on the advice from a broker, with eight out of 10 borrowers surveyed stating their broker was invaluable in securing their home loan.
While stamp duty may not be a key driver in preventing people from buying their first home, it is clearly a relief that it’s no longer a consideration for the majority of FTBs.
Mark Bogard, chief executive, Family Building Society
We all moan about politicians. They do an impossible job. This was brought home to me on Budget day when I was the ‘expert’ on a radio phone-in. Great news! The chancellor, desperately short of cash, nevertheless cut stamp duty for first-time buyers. Get the market going from the bottom up!
The first caller had completed his house purchase the week before. Would he get his stamp duty back? “No.” He hated the chancellor. But it was a step in the right direction. Why tax moving at all? It’s the easiest tax to avoid – you just don’t move.
The UK desperately needs a long-term, joined-up housing policy. Instead we get endless, individual ‘initiatives’ and ‘promises’. We’ve mainly had buy-side boosts like Help to Buy and stamp duty holidays, or the latest letoff for FTBs. Of course, what would really help is the sustained building of more new homes than annual household formations, rather than what we’ve had for decades – demand outstripping supply. But that will take years and years to come to pass.
So what to do in the meantime? We need a more liquid housing market. Moving boosts overall economic activity – just try adding up everything you end up spending when you move. And HMRC collects tax on all of it.
One day a government will simply have to bite the bullet and move from the one-off, lump sum tax that stamp duty is to something paid annually.
Rarely, this is something that most economists actually agree on. Short of this, why not help people who want to move for a new job? Or need an extra bedroom for a new child? Or, perhaps most important of all, want to downsize out of their family home as they now use only one bedroom?
At Family, we did a study with the London School of Economics and potential downsizers told us that stamp duty was the second-biggest reason for not doing so. This bungs up the whole housing market, all the way down to the FTBs.
Come on, chancellor, pull out the cork!