More than 2m first-time buyers are in the dark as to whether recent changes to stamp duty will help them get onto the property ladder.
Last November, the Chancellor Philip Hammond announced in the Budget that first-time buyers would no longer have to pay any stamp duty when purchasing a property costing up to £300,000. For those buying homes costing up to £500,000, no stamp duty is payable on the first £300,000. The changes knock up to £5,000 off the cost of buying a new home, although the Treasury estimates that the saving on the average first-time buyer property is £1,660.
Despite these savings, according to research by L & C mortgage brokers, less than one in five (18%) English first-time buyers said they know a lot or a reasonable amount about the stamp duty changes, and almost a third (31%) don't know or aren't sure if the new rules will benefit them when they buy their first home.
Greater awareness needed
A fifth (22%) of those questioned said they haven't changed their mind about the price of the property they want to buy because they don't know what impact the stamp duty changes will have.
"More needs to be done in order to ensure that first-time buyers know what is available to them," says David Hollingworth of L & C. "The stamp duty relief is welcomed by many who are looking to buy their first home, but the new rules could be considered complicated to someone who hasn't been through the process of purchasing property before".
"In fact, the lack of understanding uncovered through our research could mean that some first-time buyers think that owning their own home is one step further away than it actually is - when in reality, a saving of up to £5,000 could be the difference in getting the required deposit together or dropping to a lower LTV bracket."
New rules don't go far enough
Although recent changes to stamp duty help first-time buyers, more than half of those questioned (62%) said they thought the new rules don't go far enough, and that stamp duty should be abolished for all first-time buyers, regardless of the value of the property they are buying.
Over half (53%) of first-time buyers said they feel that it's unfair that some areas of England will receive a greater discount than others as a result of the stamp duty changes, with two in five (38%) saying that the value of properties eligible for stamp duty should increase in line with house prices.
Previous research by L & C found that the number of properties which qualify for the stamp duty exemption could fall dramatically by 2028, especially in London where prices have risen fastest. It estimates that as many as 4m properties may no longer benefit in 10 years' time.
"Abolishing stamp duty for first-time buyers altogether would help all those looking to get on the ladder, with one less expense to worry about," said Hollingworth.