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Stamp Duty

Pressure on Stamp Duty could be good news for first-time buyers.

It doesn’t matter which way you slice it, Stamp Duty is a knife in the side of every property buyer.
Recent reforms, designed to taper the punishing regime and allow greater access to the market for those at the lower end of the market, has had a negative effect at the other end.

The housing market is pretty gummed up – less properties for sale than there used to be, less transactions happening; what many commentators are calling ‘dysfunctional’ - partially because the higher rates of Stamp Duty for properties above £900,000 has prevented the older generation from downsizing and so adding to house price inflation. It also stands accused of artificially distorting the market by forcing house builders into constructing rental properties or much smaller dwellings rather than family homes.Stamp duty resized

Of course, this should bring an advantage for first-time buyers who have for years struggled against a national shortage of affordable housing, which can only be good news in the long run. Yet because extra Stamp Duty is now applied to second properties including buy-to-let investments, with an additional 3 percentage point surcharge since April this year, there is added pressure on transactions and so increasing stagnation.

The Telegraph recently came up with four reasons why Stamp Duty should be reformed and levied with less draconian rates.

Firstly, more fluidity in the market stimulated by lower rates would bring in more tax for the government.

Two, some older homeowners can’t sell because those lower down the chain baulk at the additional cost of Stamp Duty.

Thirdly, the complexity of the surcharge has caused problems among the lawyers, housebuilders and planners – all those who keep the housing market’s wheels oiled.

But fourthly, reinforcing the point earlier, this could all be good news for first time-buyers, houses are getting smaller and therefore more affordable.

The Telegraph uses the example of the company redeveloping New Scotland Yard in central London which abruptly changed its plans in September and reduced the number of three-bed homes it will build. All these points are poignant since the government’s year-old changes to the Stamp Duty regime could well be found in a file marked ‘Be Careful What you Wish For’. We can only hope for reform to lubricate a sclerotic market. But in the meantime, the Family Building Society has a solution.

Our unique Family Mortgage allows members of the family: mum, dad, aunts, uncles and grandparents to deploy their savings, and the equity in their homes, to help the younger generation raise that difficult deposit without endangering that capital. And, we have designed it so that those family members who are offering their help, don’t get a mention on the deeds of the new property and so don’t incur that vicious additional Stamp Duty on second homes.

We can also offer you and your family a leg-up with our Helping Hand Saver account which offers relatives a uniquely easy way of putting aside some money to invest for the future of the next generation.

And our Offset Mortgage can also help you to reach your goals as well as helping to make repayments more affordable.

The Family Building Society has led the way in helping first time buyers into their own homes – and has been doing so since July 2014 when we launched the pioneering Family Mortgage.

Find out more about our family friendly mortgages for first time home buyers here.

By Steve McDowell 

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Surrey KT17 4NL
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