The property world breathed a sigh of relief yesterday as Philip Hammond finally gave some respite to first time buyers (FTBs), and the market as a whole, by abolishing stamp duty on FTB property purchases up to £300,000, as well as introducing a rate of 5% on purchases between £300,000 and £500,000.
This presents a huge saving for FTBs, allowing them to not only move into their new home, but furnish it
– roll-up roll-up! furniture shops, your new marketing campaign beckons!
This is also welcome news for Vendors who have in recent years become tired of listening to agents provide the same reason for not receiving offers; 'They love your home, but are selling their flat and there just aren't any first time buyers'.
Enter stage left, Philip Hammond. It is widely acknowledged that this will make a difference to the market at all levels.
The London Broker is, however, under no illusion that we will not see scenes such as those in Black Friday stores: it will take time to sink in and for buyers to calculate the savings - which are significant: £5k at the lower end and up to £10k at the higher end.
Nevertheless, let's look at it from another angle. Do you remember the days when stamp duty threshold increased at £500,000? Properties (in particular flats), would invariably come to market at £525,000 - £550,000 with a view they
would achieve 500,000 as buyers hold tight, not wanting to pay any more stamp duty on their new home.
A new cliff edge?
Does the new change signal a return to this? Vendors will have a choice: come to the market at the above prices, or
risk losing out on a large percentage of buyers, FTBs. It will be a tough choice and time will tell how this develops.
Inevitably, there is also talk of a rise in the value of properties. It is true, properties may well come to market at the top marker, pushing FTBs to spend the stamp duty saving on the home they have dreamt of. However, We are not convinced it will make a significant difference. This assumes buyers have suddenly put down their pens, thrown on the fire endless hours of research and calculations and are now going to go on a carefree shopping spree?
I doubt it. With the advent of the portals, buyers at any level are now more knowledgeable than ever before, and this is what has changed in the market place. They come to a property armed with knowledge about the property, the Vendor, local prices and the area and have now booked time out of their busy schedule to view the property - they want to love it and buy it! Everything is right; the price, location! However, they are not about to throw caution to the wind and overspend.
"First Time Buyers - its time to come off the bench."
Nevertheless, I do believe first time buyers will now come off the bench as this is now the final piece of the puzzle: interest rates are still - at the moment - low, property prices have calmed and now the stamp duty cut will complete
the picture and 2018 will see a sensible lift in both prices and exchanges inthe property market