Philip Hammond’s flagship budget announcement that will exempt most first time buyers from stamp duty will push up house prices and benefit those that are already home-owners most, says the Office of Budget Responsibility.
In a budget that included a variety of gloomy figures about the state of the British economy in the lead up to Brexit, the Conservatives cheered loudly when the chancellor announced that the government would exempt the majority of first-time house buyers from stamp duty.
After more than a decade of home ownership rates in sharp decline, with houses increasingly viewed by millenials as out-of-reach and a luxury only available to those born in previous generations, Britain’s housing crisis has been well documented.
David Cameron’s government introduced the “help to buy” scheme in an effort to help young people buy their first home, by providing some money towards the deposit. However, the real effect of this policy was to prop up house prices, which pushed anyone not eligible for help-to-buy further away from any chance of home ownership.
Now, Hammond has announced that first-time buyers will not pay any stamp duty on houses up to £300,000 and no stamp duty on the first £300,000 for houses worth up to £500,000, which should catch the vast majority of buyers across the UK. Whilst on paper the policy looks like it will benefit first-time buyers, an examination of the figures by the OBR found that in reality the policy will cause house prices to rise by up to double the value of the stamp duty cut, leaving many first-time buyers worse off.