With less than two days to go before the Budget the housing industry has come out in force to lobby the Chancellor on Stamp Duty again.
Bradford & Bingley (B&B) claims in spite of Gordon Brown increasing the threshold for Stamp Duty from £60,000 to £120,000 in last year’s Budget 55% of first time buyers are still getting caught thanks to continuing rises in house prices.
B&B says the figure rises to 70% in London with 61% of those asked admitting they don’t know the stamp duty brackets and rates leaving them unprepared for how much they will have to pay.
The lender says its research was carried out to discover whether a year on, the Chancellor’s announcement on Stamp Duty has helped buyers onto the property ladder. It says 55% of first time buyers say they paid, or expect to pay more than £120,000 for their first property and more than a quarter (28%) paid, or are looking to pay between £150,000 and £250,000 - the beginning of the 3% tax band. 30% of those asked said they had to compromise because of the cost of Stamp Duty.
Duncan Pownall, mortgage development manager for B&B, says; "House prices are still rising so there are less and less properties available under £120,000 making more first time buyers liable for stamp duty."
"Buying in a regeneration area is one way of avoiding the tax. However, there are few affordable properties in these areas. Another option is to bargain on the price to bring it below the band. With 28% of first time buyers expecting to pay £150,000 to £250,000 this is particularly important to ensure they do not end up going over and paying 3% tax. Paying £250,000 instead of £250,001 would save them £5,000 in stamp duty," he adds.
Meanwhile Alliance & Leicester (A&L) has today called for first time buyers to be exempted from paying Stamp Duty in order to give them a better chance of getting onto the property ladder.
The bank, which has also carried out new research, claims 61% of first time buyers are looking to spend over £120,000 on their first home and will face paying the Stamp Duty tax as a result.
A&L argues the government has a real chance to help the country’s pressured first time buyers and with the average property for a first homeowner costing just over £146,000, the research highlights that most will not escape the tax despite the Chancellor doubling the stamp duty threshold last year.
Stephen Leonard, director of mortgages at A&L says: "We are calling on the Chancellor to scrap the tax for first- time buyers completely. These potential homeowners are the life blood of the housing market. With first time buyer activity at a 25 year low and house prices on the up, we hope that Gordon Brown will help ease the struggle for this group in this year’s Budget."
A&L says its research also reveals that in London only 8%of first-time buyers are looking to buy a home under £120,000, with the majority (66%) looking to pay between £146,000 and £250,000 for their first property.
And four out of ten renters and those living with their parents (40%) are desperate to buy their first home but simply cannot afford to get on the ladder.
Nationwide has also thrown itself into the debate calling on the Chancellor to use the Budget to encourage saving and help first time buyers - following research which, it says, shows expectations the Budget will help family finances are very low.
It says the government should introduce a Stamp Duty escalator so that in future the tax threshold keeps pace with rising house prices. Had it been linked to house price inflation since 1993 the threshold would now be £190,000, it argues. It also argues the introduction of a graduated Stamp Duty system would avoid 'bunching' of property prices around the current stamp duty thresholds.
Nationwide's recenr research shows consumers have little confidence the Budget will have a positive impact on them. Only 11% believe it will have a positive impact while 36% believe it will have a negative impact, and 39% expect it will have no impact at all.
Homeowners are the most pessimistic, with 41% of those buying a home with a mortgage expecting the Budget will have a negative impact on them.
Philip Williamson, Nationwide's chief executive, says: "Consumers are not expecting to hear much in the way of good news from the Chancellor in this year's Budget report. Homeowners in particular expect the Budget to bring nothing but bad news. However, we are calling on the Chancellor to surprise us all with some targeted announcements to support savers and first time buyers."IFAonline
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