Will Scrapping Stamp Duty Actually Help First Time Buyers?

Earlier today the government delivered their Autumn Budget speech and announced big changes that they say will positively affect 95% of first time buyers.

Chancellor Philip Hammond announced that from today, stamp duty will be abolished for first time buyers purchasing homes worth up to £300,000.

For first time buyers purchasing property worth up to £500,000, the first £300,000 will be stamp duty free, but they’ll pay the tax on the remainder of the property’s value.

What do I make of the changes?

I’m in the process of buying my own apartment and I’m just weeks away from completion. So for me, this is great news. I’ve saved a few hundred pounds that, had I completed the purchase yesterday, I would have had to pay. This money can now be used to ease the financial strain of buying furniture.

Woo hoo stamp duty saving for you Jenni! Nothing to pay on up to £300,000 purchases by first time buyers. @CantSwingACat

— Faith Archer (@MuchMore_Less) November 22, 2017

And I’m not the only one feeling tempted to open the Prosecco.

#Budget2017 just saved me & my boyfriend £600 on stamp duty as we’re exchanging on our first home this afternoon. To put that in context, that’s more than two months mortgage repayments! Over the moon! Money we’d written off back in our pockets just before Christmas ????????????????

— (((Siobhan Smith))) (@Smeagalsmith) November 22, 2017

However, I also feel a little pissed off, to be honest.

I’m pissed off because I don’t think the government is doing anywhere near enough to help first time buyers purchase their own homes.

Speaking on the stamp duty changes, Philip Hammond has said: “This is our plan to deliver on the pledge we have made to the next generation that the dream of homeownership will become a reality in this country once again.”

I call bullshit, Phil.

This move only really helps first time buyers who are already in a position to buy

From introducing the Help to Buy ISA to scrapping stamp duty, the Conservatives love coming up with gimmicks that make it seem like they’re helping struggling first time buyers get on the ladder. However, more often than not, these tricks only actually benefit those who are in a position to buy a home anyway.

Stamp duty change: helps young people already wealthy enough to be thinking about house buying. And helps boost house prices which were in danger of falling. Great news, but not really for poor young people.

— Jonathan Haynes (@JonathanHaynes) November 22, 2017

It’s great that I’ve saved a substantial amount of money in stamp duty, but this tax wasn’t standing in my way of homeownership because I’d already overcome the biggest milestone which was saving a deposit.

And sure, the government helped me a little when it came to saving my deposit, but the £1,000+ bonus I’ll get from them is a drop in the water compared to the actual deposit required to buy my home.

The government could have saved me thousands of pounds by pulling their fingers out of their rich Tory arses and actually doing something about the state of property prices.

Could this move backfire in an epic way and make matters worse for first time buyers?

To make matters even worse, the Office of Budget Responsibility predicts that this new change could make homes even more unaffordable for first time buyers by pushing up prices.

Uh oh… OBR assumes that the stamp duty cut will simply up house prices 1:1 “Thus the main gainers from the policy are people who already own property” pic.twitter.com/n54lwXpmnE

— Faisal Islam (@faisalislam) November 22, 2017

Stamp duty is not an ideal tax but a lot of evidence it does hold down prices a bit - Hammond has just made some houses and flats pricier.

— Stephen Bush (@stephenkb) November 22, 2017

What first time buyers really need is for hundreds of thousands of new and affordable properties to be built so that competition is reduced and house prices fall. Today, the government promised to do this, but we’ve heard it all before.

Three years ago the Conservatives promised to build 200,000 starter homes yet not a single one has been built.

What do you think of the stamp duty change? Pop over to the free Money Mess To Financial Success Facebook group to discuss it with hundreds of other first time buyers.