Chancellor Fails To Help First-time Buyers

If first-time buyers and home movers were hoping for some relief from the burden of stamp duty in the Chancellor’s Pre-Budget Report, then they were left frustrated.

Previous pledges to help first-time buyers seem like empty promises as there were no moves to alleviate the hurt that stamp duty causes, especially for first-time buyers.

Instead of increasing any stamp duty thresholds the Chancellor chose to follow the Tory line of increasing inheritance tax allowances. For married couples this now amounts to a tax-free threshold of £600,000.

Whilst following Tory ideas on inheritance tax, Chancellor Alistair Darling ignored the Troy lead on stamp duty, their idea being to scrap duty on properties worth less than £250,000. The rising price of houses has meant that more and more buyers are being dragged into the tax net, with the average price of a house for first-time buyers at £167,000, and the zero-rate threshold for stamp duty way down at £125,000. Families paying more than £250,000 for a house are hit by 3% stamp duty – on the whole amount. Calculations recently showed that if stamp duty thresholds had kept pace with house price inflation then the 3% threshold for stamp duty would start at £729,000.

Head of property at financial advisers Grant Thornton, Clare Hartnell, said: “Stamp duty is the best weapon the Government has at its disposal in helping people onto the property ladder and it is amazing that further help to first-time buyers has not been offered in the Chancellor’s latest pre-budget report.”

Paul Chafer, of Stroud & Swindon Building Society, said: “We expected great things from a potential review of housing taxes, yet once again there has been a missed opportunity to support the UK property market by reconsidering the stamp duty thresholds.”

Instead, Mr Darling said that there would be increases in grants to local authorities for new homes and he set a target of 240,000 new homes a year to be built by 2016. In 2006 185,000 new homes were built.