This week, Richard Spector, Managing Partner at city law firm ELS Legal, reviews the immediate aftermath of the abolition of Stamp Duty Land Tax for first-time buyers.
Less than a week has passed since the Chancellor Philip Hammond stood to announce that the burden of stamp duty for first-time buyers would be removed.
In his speech on Wednesday, he said stamp duty would be cut on the first £300,000 of the purchase value of a house, as long as the total property value did not exceed half a million pounds – effective immediately.
The initial outpour was not at all surprising. Those unlucky enough to complete in the weeks or even days before the announcement were unreservedly vocal about narrowly missing out on savings of a few thousand pounds.
Those yet to complete, or looking to purchase a house in the coming months were more spritely about the move. Initial figures suggest that 95 per cent of all first-time buyers would benefit, saving a maximum of £5,000.
The Office for Budget responsibility (OBR), however, was a little more sceptical. The department in charge of overseeing Government finances said the tax break was likely to push property prices up by about 0.3 per cent.
It said “the main gainers from the policy are people who already own property, not the first-time buyers themselves”.
This may turn out to be true in the long term, but recent figures show that the cut may have been a major incentive for first-time buyers who have been weighing up their finances.
Property website Rightmove, which published the figures, said it saw a 54 per cent rise in searches for London properties up to £500,000. Furthermore, physical agents reported buyers “calling to raise offers” on properties in the minutes proceeding the Chancellor’s announcement.
About Richard Spector: Managing Partner Richard specialises in property transactions and commercial litigation. Richard has acted in a number of high-profile cases and was heavily involved in the litigation that arose from the collapse of Lehman Brothers. Richard has been involved in a number of cross-border litigation cases and recently acted successfully for the Claimants in Harlequin Property (SVG) Ltd & Anr v Wilkins Kennedy, listed in the Lawyer’s top 20 cases of 2016.
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