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Property news round-up… Stamp Duty cuts for first-time buyers? Britain’s buy-to-let boom? What do the experts think…?

Gabrielle Pickard
Written by Gabrielle Pickard

The property market doesn’t stand still for a minute and October saw some ups and downs for the industry. One ‘up’ is news that the Chancellor is considering bringing in a significant Stamp Duty cut for first-time buyers in London.

Among a series of so-called ‘bold measures’ being looked at by the Chancellor ahead of the Autumn Budget is aimed at helping youngsters in their 20s and 30s get on the housing market by restoring some ‘intergenerational fairness’ into the property buying system.

Stamp Duty is a significant cost for anyone looking to buy a home, particularly in London where even a first-time flat costing £250,000, will demand a stamp duty bill of £2,500.

Cutting Stamp Duty for first-time buyers in London, would be a ‘bold measure’ in helping youngsters get their foot on the property ladder in the notoriously difficult-to-buy-property city of London.

Mr Hammond says he is looking for ways to restore faith in the system for young people, during a time when senior ministers fear the link between working hard and ‘getting on’ has been significantly weakened.

In order to shed some light on the subject, Agent Wow spoke to Will Herrmann, Director of West Eleven, a high-end property development and investment company, about the issue of Stamp Duty and the negative impact it’s having on first-time buyers.

“In the current market in London, £1.5 million is not a price range for the ultra-wealthy but buys a family home. The introduction of Stamp Duty has almost stopped this market, which not only affects the top end of the market, but filters all the way down to first time buyers.

“Stamp Duty has obstructed the housing market for both developers and would-be home owners, but The Office for Budget Responsibility’s research into the policy has proven that the Government has damaged their own tax intake also. While George Osborne may have introduced a higher rate of Stamp Duty in 2014 to regulate housing prices, the policy has not been successful.

“Developers are having to work harder to address this. At West Eleven we are tackling this by striving harder to find value in all of the sites we acquire. We source sites that allow us to unlock opportunities which have most likely been overlooked by others. I believe Stamp Duty needs to be reversed to ensure we have the correct conditions for growth,” Will Herrmann told us.

Mark Homer of Progressive Property told Agent Wow that he welcomed the move to cut Stamp Duty for young people.

“Cuts to Stamp Duty for young people are a welcome proposal. As purchase prices have increased transaction costs have increased significantly with stamp duty and legal costs being increased disproportionately since the credit crunch. Coupled with help to buy and relaxations to building on the green belt this could be part of a grander plan to increase supply and reduce entry costs to allow young people to get on the first rung of the ladder.

“Whilst possibly initially unpopular with the treasury due to the reduction in revenue which it could precipitate, this could be made up through increased council tax from new properties,” said Homer.

Aaron Cambden, owner of the award-winning Letting and Estate Agents Fairview Estates, commented on the Chancellor’s plans to significantly cut Stamp Duty for young people looking to buy their first home in London.

“I’m a strong believer that any idea to reduce costs for first-time buyers is beneficial, but I don’t think that it should just be aimed solely at London. It’s no secret that first-time buyers are struggling throughout the entirety of the UK and subsequently I think there should be a nationwide addition to help the younger generations get on to the property ladder,” said Cambden.

When asked whether cuts to Stamp Duty is the answer to helping people get their foot on the property ladder in the capital, Aaron Cambden said:

“Stamp Duty should be cut in general for anyone who is buying a home. I don’t agree with it for either first or second-time buyers. However, I think it should be increased for anyone who will own two or more houses. Despite this, even though I think a Stamp Duty cut would largely will benefit first time buyers, I don’t think it is the main reason they can’t get on the property ladder. The real issue here is house prices, they are just too high compared to wages for most buyers and I think the only way to combat this is to build more.”

Britain’s buy-to-let ‘in boom’

Another positive property news story to circulate in recent weeks is the announcement that the buy-to-let industry is in boom in the UK.

Buy-to-let mortgages at a ten-year high

A far cry from the gloomy buy-to-let outlook in recent months, plagued by news of the raft of tax changes coming into play that will result in landlords being out of pocket, research shows that the number of buy-to-let mortgages are at a ten-year high.

With buy-to-let mortgages at a ten-year high and interest rates at a record low, it’s hardly surprising people are continuing to invest in property and the buy-to-let market in the UK is hailed as booming.

Progressive Property’s Mark Homer provided his thoughts on the so-called ‘buy-to-let boom’.

“As a natural consequence of the UK banking industry continuing to repair itself in the 10 years since the credit crunch most have got their balance sheets back into shape and are meeting the regulators capital adequacy ratios. This coupled with relatively benign implement backdrop has culminated in lenders making strong profits from Buy to Let hence they are focussed on this sector.

“As the number of buy to let landlords is set to decrease due to new taxation and regulatory controls lenders are needing to become increasingly innovative resulting in an increased product range, hence buy to let mortgages are now at a 10 year high.”

Fairview Estates’ Aaron Cambden also commented on the so-called buy to let boom in Britain, despite the dramatic changes being brought in on how landlords can claim tax relief.

“I think that the reason for this ten-year high is due to the boom and the bottom then falling out of the market. I wouldn’t say that the borrowing was close to where it was before the boom currently.

“If you look at the stats: 2007 – £45 Billion Buy to let Borrowing. Below £10 Billion 2009. Estimated £35 Billion in 2017. Estimated £33 Billion 2018,” said Cambden.

How will the property market shape up this month? What will be the ups and the downs? How will the Autumn Budget implicate the market? Agent Wow will provide some expert insight into some of the most pressing property issues…

About the author

Gabrielle Pickard

Gabrielle Pickard

Gabrielle brings more than a decade’s writing and editing experience, having been creating and editing high quality content for a wide range of publications in the property sector, reporting about the latest trends, news and developments in this fast-paced industry that doesn’t stand still for a second.

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