Hammond’s efforts to boost housing supply welcomed; questions over stamp duty cut

Chancellor Philip Hammond’s efforts to boost housing supply “should be welcomed” and are “long overdue” according to Schroders senior European economist Azad Zangana.

In yesterday’s Budget announcement, Hammond said over the next five years, the government will commit a total of at least £44bn of capital funding, loans and guarantees to support the UK housing market.

Responding to the announcement, Zangana said however, that the scrapping of stamp duty for first time buyers “will simply serve to distort property prices further”.

“Indeed the OBR has said that it does not expect the policy to help first-time buyers, but will help sellers,” he added.

The firm’s fund manager for UK Equities Sue Noffke said “it remains to be seen whether the abolition of stamp duty for first-time buyer purchases up to £300,000 will be an additional boost to the sector, or ultimately replace the benefit that Help to Buy has so far provided”.

Whilst acknowledging the fact that “there are plenty of reasons for first-time buyers to be jumping for joy on the face of it”, Homegrown founder Anthony Rushworth said “in reality they only pay stamp duty of £1,500 on average”.

“Sparing them from this tax might not cause the Exchequer any loss of sleep but all this will likely do is feed into higher prices for the narrow band of properties they are fighting over.

“This is the problem with strategies that boost demand without addressing the fact there are too few homes being sought by too many buyers.”

Nevertheless, the founder of online mortgage broker Trussle Ishaan Malhi said the stamp duty charge disappearance “will have an immediate positive impact on the ability of young people to get on the property ladder”.

“It will also reduce some of the stress associated with the journey to homeownership, which could have positive knock-on effects on the way that people manage their mortgage in the future.

"For those living in areas of the UK where property is more expensive, stamp duty will still be a consideration, but the hurdle is now much lower. In London, where the average first-time buyer property costs around £410,000, the saving will be more than £5,000.”

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