Stamp duty cut having no effect on first-time property sales

THE Government’s stamp duty cut for first-time buyers is having no significant impact on property sales, the Royal Institute of Chartered Surveyors has said.

Nearly nine in 10 housing surveyors said they had seen no rise in interest from first-time buyers since the changes to stamp duty were introduced two months ago.

Theresa May has said that more than 16,000 first-time buyers have already saved thousands of pounds as a result of the change.

Earlier this month, she said that the changes had an “immediate impact”, adding that more than a million firsttime buyers would benefit over the next five years.

However, when property firms were asked whether they thought the policy would significantly help increase firsttime buyer sales over the coming months, the majority (66 per cent) told RICS that it would not.

Just over one in 10 (12 per cent) felt it would result in higher overall activity, rising to 28 per cent in London, where first-time buyers stand to benefit most from the stamp duty cut.

Under the policy, which came into effect on Nov 22, first-time buyers spending £300,000 or less on a property purchase will not pay stamp duty. On first-time purchases between £300,000 and £500,000, no stamp duty will be paid on the first £300,000, meaning a reduced rate is paid.

The maximum amount first-time buyers can save under the policy is £5,000, which is the duty arising on a £300,000 purchase. However, substantial savings can still be made on less expensive homes.

A transaction worth £208,000, the average price paid by a first-time buyer, would previously have been liable for a stamp duty payment of £1,660, but a first-time buyer will now pay nothing.

Simon Rubinsohn, RICS chief economist, said: “The initial feedback from the market doesn’t suggest that the change in the stamp duty regime announced in the budget is going to have a material impact on activity.

“Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first-time buyer.”

£5,000 The maximum amount first-time buyers can save from the stamp duty cut, with no duty paid on the first £300,000