Opinion: Autumn Budget Stamp Duty Cut
Repolist’s Anthony Ayton shares his opinion on the Autumn Budget Stamp Duty cut and what it really means for first-time buyers
Commentators were quick to criticise the stamp-duty cut announced by chancellor Philip Hammond in the Autumn budget, and I’m inclined to agree with them. The plan is to freeze stamp duty tax on first-time buyers’ homes with a value of up to £300,000. In my opinion, the reduction was essentially a pointless distraction and the savings people will actually make are minimal: the most a first-time buyer can save when buying a house is £5,000 - small fry when you consider that the average two-bedroomed house now costs around £200,000 or over £450,000 if you’re in London (2016 figures).
Talking in Parliament, Hammond said, ‘Getting on the housing ladder is not just a dream of your parent's past, but a reality for your future.’ But the real truth is, as a third of properties sold in 2016 were below the stamp duty threshold, people buying a house costing below £300,000 will see no benefit whatsoever. No new houses have suddenly become available as a result of this measure. I would suggest that the number of people excluded from the market because of the cost of stamp duty land tax are statistically insignificant. The most likely outcome is that would-be buyers of property will now be able to spend fractionally more money on a property (because of the SDLT they are saving). This will only further inflate an already over-inflated housing market, where the average deposit needed for a house now costs around £33,000.
A much more interesting statistic for me is that there are 270,000 plots of land in London alone that have recently been granted planning permission where no building is actually taking place and the ‘developer’ has no intention of building on that land. This practice is known as ‘Land Banking’ - a lucrative investment scheme that involves buying large swathes of undeveloped land with a view to selling it again at a vast profit when it has been approved for development. This is going on all over the country, but gets little media attention. Maybe if this practice was stopped we would see more affordable new homes being built on that land, which would enable thousands of first-time buyers to get on the property ladder without even having to consider the cost of stamp duty. Wake me up when the government decides to do something about that.
(Photo by Brandon Griggs on Unsplash)