Budget 2017: stamp duty tax cut will ‘drive up prices’
Budget watchdog says Chancellor's plan to help first-time buyers will mainly benefit existing homeowners
Tories applauded Chancellor Philip Hammond’s Budget plan to abolish stamp duty in order to help first-time home buyers – but according to experts, the move is likely to push housing prices higher.
The Office for Budget Responsibility (OBR) – the Treasury auditor – predicts that Hammond’s decision will probably ramp up prices up by about 0.3%, and will therefore mainly benefit those who already own properties. Some buyers with smaller deposits may be able to borrow more, “allowing them to buy properties that they otherwise could not afford – but more expensively”, the OBR says.
The Treasury argues that the tax break, which applies to the first £300,000 of homes worth up to £500,000, will be a “welcome boost”, with 95% of first-time buyers seeing a cut in the amount of stamp duty they pay, and 80% paying none at all, the London Evening Standard reports.
But according to the OBR, the stamp duty tax break may result in as few as 3,500 additional home purchases every year, while costing the Treasury more than £3bn by 2022-23.
Meanwhile, the Financial Times says that Hammond’s move does “nothing to unlock an illiquid housing market, which means there is not just a shortage of new homes but also of the many more existing ones for sale”.
