Good news for first time buyers

Tuesday 28 April 2015  / Ruth Montia

The up and coming General election has encouraged Labour to intervene dramatically in the sales market by suggesting they will allow for first time buyer purchases of properties valued up to £300,000 to be exempt from stamp duty.

The announcement was made yesterday and featured in the Financial Times. At the weekend Labour set out plans for rent caps in line with inflation and longer private rental tenancies.

Ed Miliband, leader of the Labour Party said “It is simply too expensive for so many young people to buy a home today, saving up for the deposit, paying the fees and having enough left over for the stamp duty. So we’re going to act so we can transform the opportunities for young working people in our country. For the first three years of the next Labour government, we will abolish stamp duty for all first time buyers of homes under £300,000.”

As it stands Stamp duty is currently payable on homes valued above £125,000. It is charged at 2% for the first £125,000 and the rate then goes up to 5% after that. This means that a first-time-buyer purchasing a property for £150,000 would save £500. If the property was sold for £250,000, they would save £2,500.

Labour also maintains that developers agree to give first-time-buyers a chance to purchase homes as a condition of the planning permission they need to build them.

To me this seems like a wonderful amendment to the system and helps the country to build confidence in our government. There is a clear issue with affordability at the moment and Labour has acknowledged that and this is a hopeful step on the ladder for first time buyers.

Milliband goes on to say “There’s nothing more British than the dream of home ownership. But for so many young people today that dream is fading with more people than ever renting when they want to buy, new properties being snapped up before local people get a look-in, young families wondering if this country will ever work for them. That is the condition of Britain today, a modern housing crisis which only a Labour government will tackle”.

Surprisingly the National Association of Estate Agents says Labour’s proposal could be a real vote swinger which would only mean good things for young purchasers. Managing director Mark Hayward from the NAEA says “For many, hidden costs such as stamp duty can be the difference between being able to afford a home, and not being able to afford one. Our recent research showed that just under a third of house sales were made to first time buyers, and hopefully we’ll see this significantly increase over the next three years.”

Not everyone in the industry has been so supportive though and some are suggesting that Labour is stirring up an intergenerational war.

The General Election takes place next week on the 7th May 2015; the decision made in this day will impact our country and the future of it greatly.