The end of the Stamp Duty holiday for first-time buyers in March could have a disastrous impact on the bottom end of the housing market, the National Association of Estate Agents is warning.
The NAEA is reminding first-time buyers that they need to act quickly to avoid paying the tax, urging purchasers to communicate with their solicitor and other buyers in the chain in order to move the process forward and complete before the March 24 cut off.
When the tax exemption comes to an end, first-time buyers will have to pay tax of 1% on house purchases between £125,000 and £250,000, and a tax of 3% on purchases above £250,000.
Wendy Evans Scott, president of the NAEA, says: “First-time buyers are key to a healthy property market. We hope to see the number of people completing the purchase of their first home continuing to increase through February and March, as many first-time buyers are keen to purchase their first home before the tax exemption deadline.
“However, it is impossible to predict what impact the end of the tax exemption will have on first-time buyers, particularly those on very tight budgets of under £250,000 for whom the 1% tax could be disastrous.
“The government will need to monitor sales closely and consider other action to support the fragile first-time buyer market.”
Figures from the NAEA show that the number of sales to first-time buyers edged up in November and December from 19% of sales per branch to 21%.
But the NAEA says first-time buyers still represent a low percentage of overall property sales, with the number of first-time buyers hitting a three-year low in October at 16% of sales.