by Mark Johnston
In 2010 the chancellor announced a 2 year stamp duty exemption for first time buyers purchasing a home costing less than £250,000, which would therefore save people up to £2,500.
The chancellor at the time expected the exemption to apply to 9 out of 10 new entrants to the market.
When the tax exemption does come to an end first time buyers will have to pay 1% tax on house purchases between £125,000 and £250.000.
The government is instead said to be prioritising more effective measures which provide better value for money.
Paul Smee, director general of the Council of Mortgage Lenders (CML), has stated that “while the stamp duty concession may not have stimulated additional demand, it was a significant help to home owners entering the market”.
Wendy Evans-Scott, president of the National Association of Estate Agents (NAEA) has suggested “first time buyers are the lifeblood of the property market and with the stamp duty holiday disappearing from March, the government will need to do more to help the fragile first time buyer market”.
However, some analysts predict that even with out the relief for first time buyers, stamp duty land tax (SDLT) receipts will only grow marginally from £6 billion in 2010-11 to £6.4 billion in 2012-13.
With only 2 months left many estate agents are now remaining first time buyers that they currently need to act quickly to avoid paying the tax. They are urging the home buyers to communicate with their solicitors and other buyers in the chain in order to move the process forward and therefore enabling them to complete before the March 24th cut off.
The National Association of Estate Agents (NAEA) says “we hope to see the number of people completing the purchase of their first home continuing to increase through February and early March.
Experts believe that the end of the stamp duty holiday could have a disastrous impact on the bottom end of the housing market.
The Council of Mortgage Lenders (CML) for one still believes however it would be a mistake to ‘pull the plug’ on the concession, at least until the housing market returns to a firmer footing. They also warn that ‘its withdrawal will drag the housing market backwards’.
Many experts believe that it is impossible to predict what impact the end of the stamp duty holiday will have on first time buyers, particularly those on very tight budgets of under £250,000 for whom the 1% tax could potentially be disastrous.
In conclusion the housing market can act as a force for growth in the economy, but if this is to happen then buyers, lenders and builders alike all need a clear message that the government sees them less as a part of the economic problem and more a part of the economic solution.
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