3% Stamp Duty surcharge changes missed in the Budget

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On Wednesday, Philip Hammond announced in his budget that first-time buyers would no longer have to pay the tax if buying a house worth up to £300,000.

This is good news for buyers taking their first step on a housing journey.

Mishcon de Reya said the relief on when a purchaser adds to their interest in their existing main residence "is particularly helpful as it gives relief from the surcharge for the price paid for lease extensions on a main residence, which was one of the more unfair applications of the rules".

Both measures were created to help young people get a foot on the housing ladder but it has emerged that many shared ownership properties are too expensive for the stamp duty break to be applied.

Theresa May and Philip Hammond
GETTY PRAISE Mr Hammond’s Budget was praised by Mrs May

As London house prices are so high especially for first-time buyers, borrowing is up to £3.31bn.

The area still paying the highest is South Bucks at £7,100 although this has reduced from £12,100, with first-time buyers in Elmbridge (£6,011), Chiltern (£5,507), Three Rivers (£5,368) and St Albans (£5,190) all also paying over £5,000. Indeed, the Office for Budget Responsibility estimate that the policy will only add about 3,500 new transactions and some of those would have happened anyway. They also predicted that house prices are expected to rise by 15 per cent between the second quarter of 2017 and the first quarter of 2022. Well, yes, for the individuals that can benefit, but less so for the long-term recovery and stability of the housing market.

London first-time buyers usually borrow around £275,000, the United Kingdom average is £139,000.

This point about rising prices was put to the chancellor on the Today programme, but he said this was looking at the stamp duty change in isolation without the effect on the market of the 300,000 net homes per year that the government plans to build in England by the middle of the next decade. Without making it easier for all homeowners to move on, the supply of property to buy will always be limited, and that will hinder everyone in the market, from first-time buyers to upsizers to downsizers.

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