Stamp duty abolished for first-time buyers – Industry reaction

Stamp duty abolished for first-time buyers – Industry reaction

Chancellor Philip Hammond announced the abolition of stamp duty for first-time buyers on properties up to £300,000 in his Budget speech. How did the accountancy industry react?

In his Autumn Budget speech, chancellor Philip Hammond announced the abolition of stamp duty for first-time buyers on properties up to £300,000. Stamp duty will also be waived for first-time purchasers on the first £300,000 for properties worth up to £500,000.

Hammond also announced an initiative to tackle housing market challenges, including the introduction of planning reforms, funding for skills and resources in the construction sector, and £15.3bn in financial support for housing over the next five years.

So, how did the accountancy industry react to the measures designed to fix housing in the UK?

Senior partner at Grant Thornton in the North-West Karen Campbell-Williams said that it was a “depressing statistic” that the number of 25-34-year-olds owning a home has dropped from 59% to 38% in the last 13 years.

Abolishing stamp duty was “a bold move”, she said.

Campbell-Williams added that the £44bn package for housing would “support the building of new homes, including much-needed construction skills”.

“Our society needs to work for everyone so it was good to see the chancellor announce £28m for three new ‘housing-first’ pilots in Manchester, Liverpool & the West Midlands and a new homelessness task force to eliminate rough sleeping by 2027. Andy Burnham has pushed for this and appears to have been listened to,” she added.

The ACCA welcomed the abolition, agreeing that it was a bold move.

“Ensuring it is stepped up to £500k also means it can provide meaningful benefits for first time buyers in the capital and other major cities,” said Chas Roy-Chowdhury, head of taxation at ACCA.

He added a further proposal to boost the housing market.

Chowdhury said: “One option we have not seen is of exempting properties taken in part exchange by builders from Stamp Duty. If they were exempt from Stamp Duty as temporary trading stock it would remove a disincentive for house-builders to redevelop existing stock and help stimulate supply. This would help get the housing market moving and help first time and buyers where the seller is unable to move.”

A ‘show-stopping moment’

Brian Palmer, tax policy expert at AAT, said that the stamp duty announcement was “one of the show-stopping moments” from the Budget speech, removing a “significant burden for many thousands of people who have been struggling to access the housing market”.

Yet, the move was “of no value to other potential buyers”, he said.

“AAT will continue to call for stamp duty liability to be switched to the seller, so that people moving up the housing ladder would be paying duty on the (likely) lower-priced house they are selling, not the higher-priced one they are buying.”

Did Hammond go far enough?

Kevin Hindley, managing director at Taxand, Alvarez & Marsal, said that while the stamp duty withdrawal would be “very welcome from those trying to achieve their first step on the property ladder”, UK residential real estate was in need of a “fundamental overhaul”.

“Over the last few years UK residential real estate has become a highly complicated asset class and the system as a whole is in need of fundamental overhaul. In addition, fiscal and house building measures alone are unlikely to fully address the shortage of housing stock in urban areas and more creative proposals, such as micro-living units, should be given due consideration,“ Hindley said.

With political and fiscal pressure mounting on the chancellor, Hammond had “little choice” but to let the Budget go “with a whimper”, said head of tax at RSM Jim Meakin.

“There were promises about stimuli for the housing market including a centrepiece stamp duty land tax threshold of £300,000 for first time buyers. It is hoped that the review of ‘land banking’ by developers will also speed up much needed residential development but the jury is out on whether these measures will be more successful than others which have not delivered what was hoped for,” he said.

Will house prices increase?

Richard Godmon, tax partner at Menzies, warned that the stamp duty plans could see house prices jumping “almost immediately”, as the building of extra homes won’t come to fruition for a number of years.

“We should to see house price increases almost immediately on the back of this announcement. His commitment to building an extra 300,000 homes a year is not going to happen until 2020s, so this measure could lead to market overheating in the meantime,” Godmon said.

In agreement, Simon Wagman, partner at Blick Rothenberg, said that supply of homes was currently “far too low”, so the stamp duty relief would initially “only increase house prices and inflate the market”.

Frank Nash, partner and head of the property group at Blick Rothenberg, flagged that until a deal on Brexit has been agreed, “little will be done to create this number of new homes”.

“We will rely heavily on European workers to fill the gaps in our construction industry, so if the government are to demonstrate they can build, they must do a deal on EU nationals living and working here – quickly. Housing developers need people – we need beefed-up planning departments and guaranteed input for EU construction workers. Without these two things there would be more delay,” Nash said.

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