First-time buyers in London could be set for a financial boost in next month’s Budget. A report in the Evening Standard claims Chancellor Philip Hammond is ready to cut stamp duty for newcomers to property ownership.
The Standard says the Chancellor is set to take “bold measures” that will specifically help people in their 20s and 30s who are struggling to finance a home purchase in the capital.
Stamp duty has to be paid on all property valued at £125,000 and above. With London house prices far outstripping those in the rest of the UK, it puts young buyers in the capital at a financial disadvantage. For example, a small flat would cost around £250,000 in a London borough and attract a stamp duty fee of £2,500.
Added financial burden in the capital
But the average house price in London currently stands at £428,546, meaning a stamp duty bill of around £14,000. And with stamp duty paid on a sliding scale – up to 12 percent on properties valued at more than £1.5 million – it means an added financial burden for those looking to invest in a London home.
The Standard quotes a Tory source saying: “The Budget is a good opportunity to seize the political initiative domestically through bold measures on issues like housing. A stamp duty cut for first-time buyers would help all those in London whose starter homes are above the threshold of £125,000.”
Stamp duty cuts have been used in the past to encourage more young people into home ownership. However, price is only one aspect of the difficult housing market in London where an increase in the supply of new homes is also desperately required. Mayor Sadiq Khan launched his housing strategy in September, calling for 90,000 new affordable homes to be built by 2021.