Stamp Duty reform would help aspiring homeowners buy, research shows
- 60% of first time buyers say paying no stamp duty would make them more likely to buy
- Stamp duty remains a significant barrier to home ownership, with 72% of aspiring homeowners saying it is difficult to meet up-front costs and 52% saving less than £250 per month
Almost two in three aspiring homeowners would be more likely to buy if they didn’t have to pay stamp duty, new research published by Yorkshire Building Society shows.
The UK’s second largest building society has asked the Government to consider reforming property tax to make it payable by sellers rather than buyers.
The Yorkshire estimates such a reform would save first-time buyers in the UK excluding Scotland an average of £3,791 , with Londoners saving the most at an average of £13,171.
In a survey carried out by YouGov, 60% of aspiring homeowners said paying no stamp duty would make them more likely to move, with 22% saying it would not make a difference and the remaining 18% answering ‘don’t know’.
More would-be first time buyers said paying for up-front costs including stamp duty would be difficult (72%) compared to raising a deposit (69%) and making monthly mortgage payments (34%).
The research showed that 18% of potential first time buyers were not saving anything towards buying a home, and a further 52% saving less than £250 per month.
The Society argues this highlights the significance of stamp duty acting as a barrier to people achieving their homeownership aspirations.
Andrew McPhillips, Chief Economist at Yorkshire Building Society, said:
Saving enough to pay stamp duty adds to the overall difficulty of buying a home. It is hard enough for buyers to find the right property in the right location without the need to pay additional fees and taxes, given the scale of house price inflation in recent years.
The Government’s Housing White Paper will rightly outline plans to resolve the crisis faced by those unable to buy a home. But these will be long-term ambitions and measures to ease the problems in the short-term, including reforming stamp duty, should form part of the Government’s strategy.
Reducing any of the costs such as stamp duty for first time buyers and those moving up the ladder would help to make homes more affordable for many, enabling more people to realise their homeownership aspirations.
Such a reform would leave downsizers – those existing homeowners moving to a less expensive property – facing a higher stamp duty bill as part of the support for the younger generation.
However, the survey showed that only 37% of downsizers said such a reform would make them less likely to move, likely due to the significant amount of equity they have built up in the home as a result of historical house price inflation.
Aspiring homeowners and those moving up the ladder were in favour of the reform suggested by Yorkshire Building Society, with only 9% and 13% of each group saying they opposed such a move. Just over a third of upsizers said they would be more likely to move as a result of such a change, with only 2% saying they would be less likely to move.
Earlier this year, Yorkshire Building Society published research into the challenges facing young people in getting on the housing ladder.