Stamp duty skews the market to first-timers

STAMP duty is clogging up the housing market, as figures show that there are more first-time buyers than people moving home for the first time in more than 20 years.

The proportion of first-time buyers purchasing homes has overtaken the number of existing homeowners moving house for the first time since 1995, according to a Lloyds study. Across the UK there were 170,000 home-movers in the first half of 2018, compared with 175,500 first-time buyers, it found.

Last year the Government introduced a new stamp duty relief for first-time buyers. But families wanting to upsize, move to a new area or downsize, are still being hit with huge stamp duty bills. A young family moving from their first owned flat into a £400,000 family home must pay £10,000 in stamp duty up front. Mark Hayward, chief executive at the National Association of Estate Agents, said: “Traditionally homeowners used to move once every seven to nine years, but now they only move every 20 years.

“Changes in the market mean the property ladder now has less rungs than it used to, which are further apart.

“There has been a distinct change in the way people view a home. They would rather allow money for holidays and family than upsize. Its also now cheaper to extend.

“People also find the cost of moving is increasingly prohibitive. The Government should look to remove some of the barriers to movement, including stamp duty, as it would help the economy by freeing up people to move towards new jobs.

“In the past, stamp duty wasn’t much of an issue and there was high wage inflation so people knew they could afford to move up. People would only expect to stay in a flat for two or three years. But now first-time buyers are trying to buy ‘second stepper homes’ with two or three bedrooms.”

The average price paid by movers for a home has surged by 35 per cent – or £77,457 – from £219,479 in 2013 to a high of £296,936 in 2018, Lloyds said.