Boris Johnson has called for a cut in “absurdly high” stamp duty, which has resulted in more than half of 25 to 34-year-olds “shut out of the housing market” – but one leading estate agent says it is older homeowners who need a tax cut.
Writing in yesterday’s Daily Telegraph, Mr Johnson argues that high stamp duty rates are “freezing whole chains of purchase as people are deterred from trading up, with the result that older people are staying in houses that are too big for their needs and younger families don’t get a look-in”.
He adds that young people can’t be expected to be “sympathetic to capitalism when they find it so tough to acquire capital themselves”.
Surprisingly, his comments come in the wake of research published by Halifax, which reveals that the number of first-time buyers has risen by around 3% in the first six months of 2018 to 175,500, compared with 171,200 in the same period last year.
Halifax says that first-time buyers now account for 51% of home buyers taking out a mortgage – up from 38% in 2008.
Commenting on Mr Johnson’s article, Paul Smith, chief executive of haart estate agents, says that first-time buyers are benefiting from last year’s stamp duty cut already and that it’s the rest of the market that needs to see a change.
He says: “You cannot doubt the impact the government’s stamp duty cut last autumn has had on the first-time buyer market. In July, we saw 22% more first-time buyers registering to buy than the same time the year before – the highest number registering to buy since August 2016. Surely, it is a no-brainer for the government to look at how they can replicate this success across other areas of the market.”
With this in mind, he says a stamp duty cut would encourage over-55s to downsize.
“As a result, prices for in-demand family homes are far outpacing the average house price rise, and many families are finding themselves priced out of their own market. A stamp duty cut would act as an attractive proposition and an alternative to staying put, freeing up crucial family homes,” Mr Smith adds.
Mr Smith also suggests that the additional 3% stamp duty for those buying second homes needs to be removed because of the negative impact it has on tenants.
“Perhaps most damaging for young people is the government’s policy of a 3% stamp duty surcharge for buy-to-let investors. The surcharge for investors has reduced the number of rental properties available as landlords have stopped buying in the same volumes.
“A cut in stamp duty for investors would incentivise landlords to come back to the market and stop rents from spiralling out of control. The government has got this badly wrong and must change course” he says.