Since the stamp duty rate was cut first-time buyers seem to be returning to the housing market. Moneysupermarket.com has seen a 15% increase in the number of potential first-time mortgage customers and just over ¾ of visitors to the site thought the cut was fair.
Zoopla.co.uk, a property website, says that 75% of all homes currently on the market are valued at less than the new stamp duty threshold of £250,000. The director of the site, Nicholas Leeming is hopeful that the new change to the threshold will remove the majority of homes out of the stamp duty net and give the housing market the boost it needs. Last year only around 200,000 people bought their first home, that’s 50% down on normal levels.
A problem still remains however and that is the precise definition of first-time buyer and how it will be enforced. Someone for example who sold their home and then waited a few days before applying for a mortgage could appear to be a first-time buyer. There is also the danger that the government risks creating a distortion in the market with buyers and sellers trying to avoid the £7,500 tax levy once the threshold is reached.
The Council of Mortgage Lenders did give a cautious welcome to the stamp duty concession but they also feel that implementation will not necessarily be straight forward. They believe that the concession should be extended to all properties under £250,000 regardless of the status of the buyer.
They also say that it is hard to predict the overall impact these new changes will have on the housing market. Although the new threshold is aimed at boosting sales, the real barrier for the majority of people looking to enter the housing market is the size of deposit that they need to put down to secure a mortgage.
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