234,000 home buyers could benefit from stamp duty extension

Up to 234,000 home buyers who have already agreed a sale could be exempt from paying Stamp Duty Land Tax (SDLT), should the Chancellor confirm his three-month extension to the holiday in next week’s Budget.

According to new analysis by Zoopla, this could equate to a total estimated saving of £984m for those buyers.

The latest Zoopla House Price Index revealed the market share of first-time buyer sales reached its lowest level since 2016 last year, accounting for 31% of sales, a figure down from 35% in 2018.

The pandemic, combined with a rapidly shrinking range of high LTV mortgage products, squeezed first-time buyers’ purchasing ability and created a “sharp juxtaposition” with their previous position as the engine of the housing market, the property expert stated.

However, despite the cash-fuelled advantage of older, high-equity homeowners, many of whom are not reliant on mortgages in order to move, Zoopla’s evidence also indicated that first-time buyers are now returning to the market – with a 5% rise in demand from first-time buyers in the first six weeks of the year compared to Q4 2020.

Furthermore, sales agreed for properties priced between £100,000 and £150,000, a sector of the market where first-time buyers are typically more active, have risen by 26% from Q4 2020.

Zoopla said its analysis suggests that first-time buyer activity has been boosted by a gradual return of higher LTV mortgages and the ongoing benefit of stamp duty relief – which is expected to be extended for three months beyond 31 March at next week’s Budget.

“The strong bounce in demand seen at the start of the year has been further boosted by increased numbers of first-time buyers active in the market,” commented Zoopla head of research, Gráinne Gilmore.

“Many of these buyers will be taking advantage of the increased number of home loans now available for purchasers with smaller deposits, and most will be less concerned about the ending of the stamp duty holiday on 31 March.

“First-time buyers have no property to sell, so their increased activity in the market is further pushing up buyer demand ahead of supply. As the growth in demand continues to outstrip the supply of homes, it puts more upwards pressure on prices.

“We can see this in the 4.3% average price growth in the year to January, matching the highest level of growth seen in nearly four years.”

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