The government is undermining its own Help to Buy scheme by imposing a large tax burden on first-time buyers, the Council of Mortgage Lenders (CML) has argued.
In its latest News & Views, the lenders’ body argued that, as the housing market recovers, the government is increasingly benefiting from stamp duty revenue.
It questioned why the government allows first-time buyers to be hit by the tax while at the same time introducing schemes like Help to Buy: “There is a perversity in introducing policy initiatives that seek to bridge the deposit gap for households, while at the same time exposing the same group of buyers to a material tax burden.”
Although the CML welcomed Scottish and Welsh plans to reform stamp duty, it pointed out 94% of the tax is paid by English buyers.
Stamp duty operates in ‘slabs’, meaning the buyer of a home worth less than £250,000 pays just 1% in tax but those above the threshold pay 3%.
Almost half of first-time buyers in London now pay stamp duty at a rate of at least 3% of the purchase price, compared to just over a quarter in 2006-7.
In July, the Scottish Parliament passed a bill introducing a more progressive tax. With a few exceptions, all buyers of houses with less than £2m will be better off.
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