Has Stamp Duty ‘killed’ the london market?
With a significant proportion of London’s working population comprising of young professionals, there is a significant first time buyer market available. However, there appears to be little assistance provided for individuals looking to purchase their first home.
For example, we are yet to see the long-term impact of the stamp duty relief for first time buyers introduced on 22 November 2017. Under the new rules, first time buyers purchasing a residential property for £300,000 or less are no longer required to pay any tax. If the purchase price is between £300,000 and £500,000 then SDLT is capped at 5% on the excess over £300,000.
Importantly though, stamp duty is still payable at the normal rates for any property worth over £500,000.
According to Zoopla, the average house price in London over the last three months has been £667,601 with the average flat costing £551,090. At these prices, stamp duty is payable in full and can easily be in excess of £20,000 so affordability is an issue.
The lifetime ISA seemed like an exciting opportunity to obtain a 25% bonus on any savings deposited in an eligible ISA when the government released their campaign for the launch in April 2017, but there are stringent rules involved and you can only purchase up to a value of £450,000. Similarly, the Help to Buy ISA is also of little use, as to qualify for the government bonus, the purchase price also needs to be less than £450,000 in London.