Is it worth waiting to save money on stamp duty?
October 5, 2008
Affordability for first time buyers looking to get onto the property ladder has continued to dwindle over recent months despite the fact that house prices have been falling month on month and are now said to be at their lowest since August 2006. When house prices started falling many thought that this was the news that many first time buyers had been waiting for, having been priced out of homeownership for some years. However, this was not to be because over recent months the mortgage meltdown has resulted in many first time buyers being unable to get a mortgage due to lack of affordability.
As house prices have come down mortgage costs have gone up, and first time buyers now face a range of hurdles that affect affordability, such as higher interest rates, crippling arrangement fees, and deposit levels that they simply cannot afford to put down, as they have no previous property from which to take equity. In a bid to try and increase affordability for first time buyers the Chancellor of the Exchequer, Alistair Darling, has indicated that the government may suspend stamp duty for first time buyers planning to buy a property up to the value of £250,000.
However, whilst this sounds like a promising move there has been no firm confirmation that this will go ahead, yet many people have still decided to wait it out and have even dropped out of property sales in the hope that at some point in the near future they can save themselves thousands of pounds in stamp duty. So, is it worth waiting to see whether this plan actually comes to fruition? Well, if the plan does go through then certainly many first time buyers could increase affordability to some degree by saving the cost on stamp duty, which could run into thousands of pounds.
The National Association of Estate Agents commented on the plans to suspend stamp duty for first time buyers, stating: ‘Indication that the government is looking to suspend stamp duty is very encouraging. As an association we have been urging the government for some time to address the current situation facing the housing market by calling for measures such as stamp duty holiday. Therefore, it is great to see that the government has realised that the current circumstances facing the housing market are not going to simply disappear. Drastic action is needed in order to get the cogs whirring in the market place again. If this suspension does occur then it will provide a much needed boost to consumer confidence.’
It continued: ‘However, whilst this indication that the government may scrap stamp duty is positive, clear and immediate decisions in this area need to be made. Decisive action is needed today; one concern is that the anticipation of the suspension of stamp duty may halt the transactions in the housing market even further until the decision is finalised either way. Finally, although we welcome this news today we continue to appeal to the Treasury to carry out a complete overhaul of stamp duty.’
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