Stamp duty holiday for first time buyers draws to an end
February 15, 2012 Leave a comment
A surge in the number of mortgages taken out in December 2011, may suggest that first time buyers are attempting to get onto the property ladder before the end of the stamp duty holiday which terminates on the 25th March 2012.
Since March 2011 first time buyers have been exempt from stamp duty, a 1% tax, on the purchase of properties between £125,000 and £250,000. The “holiday” was put in place by the government in an attempt to give the property market a boost. The Council of Mortgage Lenders (CML) estimates that first time buyers are now attempting to beat the holiday as they could save themselves thousands of pounds. The average first time buyer property costs approximately £130,000, so a 1% tax reduction could see buyers saving a significant £1300.
Although there has been a steep increase in the number of first time buyers taking out mortgages, the number of people moving house is on the decrease. For first time buyers, the transition from November to December 2011 saw the value of mortgages loaned increase by 10% with a 7% increase on the number of people taking out loans. The value of mortgages loaned to movers, however, fell from £4.8bn to £4.6bn between November and December 2011.
Yet despite this sudden boost in the first time buyer property market, house prices are still expected to fall by 5% in 2012. Continued high unemployment, the tightening of credit restrictions and consumer concerns about the economic outlook are all expected to have a negative effect on the property market.
Photo: Flickr/ Adrian Short