Latest Business: Moving on up

The recent Budget presents great news for first-time buyers, says Alex Mackay, of Mishon Mackay. Marc Goldberg of Hamptons International joins the debate

“The 2010 Budget was, overall, rather neutral for the property market. But there are some winners and losers. The increase in the Stamp Duty threshold – doubled to £250,000 – will help first-time buyers in more expensive areas of the country, but will be of little or no benefit to those in lower cost areas where most properties for first rung buyers are below the previous Stamp Duty level.

The government says this move will help nine out of ten buyers in the sector, but as many of these people are buying again after relationship break-ups or financial distress it is hard to agree. Certainly as this tax break only affects those who have never owned property before – including couples where one has previously been a property owner – there will be many who will not benefit from this initiative.

But, as this is effective immediately, there will be quite a few buyers about to complete a purchase who will be celebrating a windfall, and others who will welcome up to £2,500 to put towards a deposit rather than see it disappear into the government’s coffers. After all, one of the most difficult things to do when buying a property in these mortgage-strapped times is to gather together enough money for a deposit.

At the other end of the scale, Stamp Duty will be raised to five per cent on property being bought at over £1m. Again, this will affect those in the more costly parts of the country. But don’t expect lots of cynical price reductions any time soon to tempt those eager to avoid paying extra tax. This move does not come into effect until April 2011, so there is plenty of time to move up, down or across market in this sector before then.

Will either of these measures greatly affect the property market in the short term? There will be an opportunity for more first-time buyers, especially with continued improvement in mortgage availability and improved income and deposit conditions. This, in turn, could help stimulate the remainder of the market by creating more movement. The top end of the market is all too often reported on as if it somehow powers the rest. It does not. The market works from the bottom up.

So if there is anything for the property sector to celebrate from this Budget it is that it may lay some foundations for a more buoyant market in the future. But whether the Chancellor sees this happen from Number 11 is not up to him. It is up to us. Fortunately for Mr Darling, if he loses his home after the election, he and all his friends in government will have up to a year to buy something grand before they have to part with the extra tax! Now that is good budgeting.”
Alex Mackay, March 2010

“The government has taken the right step with the new Stamp Duty exemption level for first-time buyers to ensure a sustainable housing market”

A view from Hamptons International
“The 2010 budget has been described as a ‘growth budget’ for the UK economy, and, certainly, cutting stamp duty for first time buyers under the £250,000 threshold, will increase the number of potential purchasers in the lower levels of the housing market, which we hope will feed upwards.
The difficulties faced by first-time buyers in obtaining finance and finding the right properties has without doubt had an effect on the buoyancy of the housing market over the last 18 months. Removing stamp duty for first time buyers will be a welcome boost to the property market overall.

This announcement is particularly pertinent for first-time buyers in the South of the country, specifically London, where previous stamp duty exemptions have created a divide between opportunities for home ownership between first-time buyers in the North and South of the country. We believe the £250,000 level to be more representative of the budget for a first-time buyer across the UK and, as such, should have more of a direct effect on market growth.

Hamptons International has seen demand in the first quarter of 2010 within 10 per cent of peak levels, and we believe the government has taken the right step with the new Stamp Duty exemption level for first-time buyers to ensure a sustainable housing market for the remainder of 2010.”
Marc Goldberg, head of sales at Hamptons International, March 2010