This week's Autumn Statement from the Chancellor was not expected to bring much news for the housing market, but it did confirm that the relief on stamp duty for first time buyers would come to an end in March next year.
Stamp duty is normally paid on any property purchase above £125,000 but in 2010, a relief was granted to first time buyers purchasing a property up to £250,000. The aim was to provide help to first time buyers who have continued to struggle with the tougher mortgage market and need for bigger deposits when buying a home.
There had been some hope that the stamp duty exemption would be extended, but the Chancellor ended any speculation by confirming that it will come to an end on 24th March 2012. The statement pointed to the fact that statistics showed that the exemption had been ineffective in stimulating growth in the number of first time buyer transactions.
Instead, the Government is now prioritising other measures including a new mortgage indemnity scheme, backed by both Government and housing developers. This is aimed at improving the availability and cost of higher loan to value mortgages by reducing the risks for the mortgage lender.
That would be a very welcome outcome for first time buyers but we will have to wait to see how mortgage lenders respond. It is also only available on new build property which helps target the need for more new housing.
However, it does leave potential first time buyers facing the prospect of having to add a stamp duty bill back into their budgeting. In the meantime, those already mid-purchase should make sure they complete before the deadline date in March to avoid any additional cost. Doing so could save buyers up to £2,500 in stamp duty.