Despite changes to stamp duty designed to help those struggling to get onto the property ladder, more than 2m first-time buyers aren’t sure whether they will benefit from the new rules.
Since November last year, first-time buyers have no longer had to pay stamp duty when buying a home costing up to £300,000. If buying a property costing up to £500,000, no stamp duty is charged on the first £300,000.
According to research by L&C, nearly a third (31%) of potential buyers don’t know if the stamp duty abolition will benefit them when they buy their first home. Almost two in five (38%) said that had no idea how much they would save if they bought their first home now.
Understanding stamp duty savings
The changes to stamp duty rules cut up to £5,000 from the cost of buying a new home. According to the Treasury, up to 95% of first-time buyers stand to benefit, and is expected to save £1660 on the average first-time buyer property.
David Hollingworth, from L&C says: “More needs to be done in order to ensure that first-time buyers know what is available to them. 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.
“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 LTV bracket.”
Calls for stamp duty to be abolished for first-time buyers
More than half of first-time buyers (62%) questioned by L&C said they thought that the stamp duty abolition for properties costing up to £300,000 doesn’t go far enough, and that stamp duty should be scrapped for all first-time buyers.
Almost a further two in five (38%) said that the value of homes eligible for stamp duty relief should rise in line with house prices. Earlier research by L&C found that if house prices continue rising at their current rate, as many as 4 million properties may no longer benefit in 10 years’ time.
“The number of first-time buyers who believe that the tax should be abolished for all those buying their first home, speaks of the need for clarity,” says David Hollingworth. “Of course, abolishing stamp duty for all would mean financial savings for many, but it also highlights the desire for a more simple and transparent system. Going through the steps to buy your first home can feel like a daunting and complicated undertaking – so it’s really important you seek expert advice in order to make sure you are getting the best deal, and that you are aware of all your options.”
First-time buyers in the dark about stamp duty changes