12:14PM, Monday 03 September 2018
Boris Johnson hit the headlines earlier this month – no, not for talking about burkas – but for his views on the UK’s ‘absurdly high’ stamp duty.
In his regular column for the Daily Telegraph, the MP and former Foreign Secretary called for a cut in stamp duty to help young people get on the property ladder, claiming the UK’s housing market is a ‘disgrace’.
He called for stamp duty to be cut and warned of an ‘oligopoly’ of construction companies reducing the supply of new homes by ‘land-banking’.
Accusing housing developers of showing ‘disdain’ for young people, he said: “This is meant to be Britain, the great home-owning democracy, but we now have lower rates of owner-occupation for the under-40s than France and Germany.
“That is a disgrace.”
Stamp duty – the tax paid on property purchases – netted the taxman a record £13 billion in 2017, up 13 per cent on 2016 and a 95 per cent rise on just five years ago.
The rise has been driven by a succession of rate increases and a surcharge on second homes.
Trying to redress the problem, the Government changed the rules on stamp duty at the autumn budget last year, so that first-time buyers now pay no stamp duty on the first £300,000 of any home that costs up to £500,000.
However, a recent study by mortgage broker L&C Mortgages reveals that a third of potential buyers do not know if stamp duty relief for first-time buyers would benefit them, while only one-tenth thought the savings would amount to much more than £5,000.
The research also reveals a fifth of new buyers had not revised their house-buying budget because they did not know the impact the new rules would have on them.
Unfortunately for many, this means they under-estimate what they can afford.
“The stamp duty relief is welcomed by many who are looking to buy their first home but the new rules could be considered complicated to someone who hasn’t been through the process of purchasing property before,” said L&C’s David Hollingworth.
“In fact, the lack of understanding uncovered through our research could mean that some first-time buyers think that owning their own home is one step further away than it actually is – when in reality, a saving of up to £5,000 could be the difference in getting the required deposit together, or dropping to a lower loan to value [mortgage].
“Abolishing stamp duty for all would mean financial savings for many, but it also highlights the desire for a more simple and transparent system.”
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