Why it’s a mistake to reduce Stamp Duty for First Time Buyers

22 November 2017

We should find out later if the Chancellor will carry out the much talked about cut in Stamp Duty (SDLT) for first time buyers. At first it seems like a neat way to help those trying to get on to the ladder for the first time, freeing up cash to help with the cost of purchase.

And it will help.

But only for a few months.

How long will it be before estate agents valuing first time buyer property will say something along the lines of “well, you see Mr Seller, because there are more first time buyers looking since the SDLT alteration and your property will likely sell to a first timer, lets see if we can ask a bit more because the market in this sector is so busy.”

That’s how estate agents correctly do their job – they are there to spot trends and increase or decrease asking prices accordingly.

So any saving on Stamp Duty which will commonly be around £2000 will be swallowed up with property inflation.

The root of the housing crisis is lack of supply – there are simply not enough new homes being built. Sajid Javid has said we need £50bn investment to solve the issue which amounts to £800 for every UK resident.

So rather than pushing up property prices even further with a Stamp Duty holiday, I would like to see that money invested into building new council properties, speeding up the planning process or clearing contaminated industrial land to make development easier.

Anything else is frankly just a headline.