In his new budget plans, Phillip Hammond, Chancellor of the Exchequer, outlined that Stamp Duty will be abolished for all first-time buyers purchasing a home up to £300,000. The incentive is to help first time buyers who are struggling to get onto the property ladder. It is predicted that 95% of first time buyers will see a Stamp Duty cut whilst 80% will end up paying none. Further predictions indicate that the average first time byer will save approximately £1,700. However, the public remains sceptical and feel like their concerns have been ignored. Although the new legislation may appear as a success on the surface, will it make a difference?
There are two main reasons as to why first-time buyers are struggling. Firstly, some find it difficult to save the hefty sum required for a deposit to secure a property. Hence, the new legislation will be beneficial as the money that would be spent with the previous Stamp Duty rules can now be put towards a deposit. Although this is certainly helpful, abolishing Stamp duty fails to tackle the issue of rising house prices. People in areas with expensive housing such as London will still have to pay large sums for their new home. In this case, the money that they will save seems minuscule in comparison. Secondly first-time buyers simply don’t earn enough.
It could be argued that the stamp duty change doesn’t genuinely help the affordability of housing issue leading to criticisms of the new budget.
People who are struggling to make ends meet and rely on state benefits would have greatly preferred an increase in pay, some addressing of inflation or cutting VAT. To them, the new Stamp Duty scheme simply isn’t enough; especially if they are already homeowners or must rent.
There are further criticisms of other aspects of finance that haven’t been acknowledged, such as families wanting better access to child care so parents can return to work. Many find that the cost of childcare outweighs any potential earnings that should be benefitting the household. Another issue raised by students and graduates who would like the growing cost of tuition fees to be addressed.
Abolishing stamp is a small step in the right direction. The government is clearly taking an incentive to help first time buyers who are struggling to buy a property. However, the new legislation fails to address arguably larger financial concerns that have been voiced by the public. The new budget is beneficial but it simply isn’t enough.