So happy my offer has been accepted? But oh WAIT, the dreaded stamp duty…
The Times recently stated, “Stamp duty only used to be paid by the wealthy property buyers but now it makes younger buyers poorer”.
As promised, here is an update on my last blog – the sales market is it doomed? I started the process of buying my first ever home in London.
To give you an update – I have had an offer accepted on an amazing property in my perfect location! So happy! But the excitement flattened, as a first-time buyer I was shocked in the increased stamp duty to 5%. I sat there – looked over all the figures – How do they expect first-time buyers to save for a deposit, pay the mortgage and solicitor’s fees as well as pay a hefty stamp duty? Naomi Heaton (CEO of a Property Investment firm in PCL) has said the fall in home sales is ‘very concerning given additional government schemes for first-time buyers’. The Guardian have also blamed the huge rise in stamp duty as London home sales fall by 40 per cent!
The Telegraph has stated that stamp duty is not actually helping first-time buyers – an example was shown of a married couple trying to buy in Brixton, found their dream home at £345,000, offer accepted but did not budget for the stamp duty and had to pull out due to an additional £10,350 for stamp duty that they could not find the money for! Contradicting the latter, Marsh & Parsons have stated that home purchases have increased from 22% to 34%, according to data collected from buyers across all Prime London. The FT have also said the 3% rise in stamp duty for private landlords has scared off buy-to-let purchases which have given a larger market to just regular buyers.
According to the Land Registry in 2016 we have seen that the huge rise in stamp duty is blamed for London’s sales falling by 40% with the average stamp duty at a whopping £16,500 – even more so in Central London with a 60% fall (only 62 properties were sold in Central London in 3 months!). Comparethemarket.com has shown that a third of people are choosing to renovate their homes instead of selling/ moving. I had this experience a few times whilst looking – viewings booked, properties had already decreased their prices by 20-30% and then the seller decides to not sell!
However, if we scrapped the stamp duty – what would happen to house prices?! Of course in logical thinking, bringing more people into the property market without increasing supply is likely to push prices up? It has also been suggested by Yorkshire Building Society, that Stamp Duty should be paid by the house sellers rather than the buyers to remove the burden of money so that younger generations who are struggling can actually get on the property ladder earlier in life!
So, what are you thoughts? Should the stamp duty be paid by the sellers? Should it be different for first-time buyers? Or has the increase actually helped the property sales market? I’m interested in your thoughts on this.