Gov to announce Stamp Duty Cut for first time buyers

[MARTINX9]

On 11/14/2017 at 6:36 PM, Just_Do_It said:

If you have bought in the past then you're not a first time buyer.  I'd be surprised if they can't/don't check the land registry for previous purchases.

 

You might be lucky - if the records don't go back far enough.

 

I expect it will be similar to the application for the help to buy isa bonus i.e. you have to sign a declaration to HMRC (via your solicitor) declaring you have never owned all (or a part share) of a residential property anywhere in the world to get any FTB stamp duty concession.

Of course if you inherited a studio flat in Budapest from your Hungarian grandma 25 years ago (all EU nationals legally will be eligible under EU law) they might not be able to check - but the assumption is people won't want to commit fraud by signing a false declaration to the UK tax authorities to save a few grand. 

Edited November 15, 2017 by MARTINX9

[Wayward]

59 minutes ago, gruffydd said:

Um, the banks are the main driving force between house prices rises - capital flow... mortgage flow... gov enables that and tinkers but direct help has little impact. 

??? Government and BOE measures to distort the market in the multiple ways discussed on this website many times and at length are the reason this website exists!! " little impact" ??? no dont agree at all.

[guest_northshore]

1 hour ago, mattyboy1973 said:

THe point is that stamp duty is paid in cash that could otherwise be added to the deposit, so in theory this could be levered up - perhaps many times. E.g. Let's say you are a Londoner buying a 300k house with a 5k stamp duty liability. You've saved a 30k deposit and got a 90% LTV mortgage. With the 5k savings you now have a 35k deposit and could (perhaps) now buy a £350k house with a 90% LTV.

I've argued that, but it might be wrong.

Think MMR affordability is capped by expenditure affordability and a higher % stress test. Making the deposit more a function of the max loan at a given LTV and mortgage term?

(There are also LTI guidelines but they're institutionally flexible and rolling - and average LTI has risen).

But leverage could flow from facilitating/bringing forward more purchases by higher income earners with lower saved deposits; adjusting the income profile of a FTB. Increasing numbers of new >25y term mortgages & lower LTV attracting lower rates may also impact.

[Wayward]

8 hours ago, Bruce Banner said:

I did, until Cameron and Osborne reneged on their pre-election "promise" to sort out Labour's housing bubble and pumped it up to new heights with HTB, FLS and all their other schemes. I shall never forget the daily images of "the posh boys" in their high visibility jackets and hard hats.

On the face of it I should be a natural Tory voter but no way will I ever vote for them again after the antics of the last four years...but I wont vote Labour either. Only reason I will go in the polling station will be to turn the tables over.

[mattyboy1973]

5 minutes ago, guest_northshore said:

I've argued that, but it might be wrong.

Think MMR affordability is capped by expenditure affordability and a higher % stress test. Making the deposit more a function of the max loan at a given LTV and mortgage term?

(There are also LTI guidelines but they're institutionally flexible and rolling - and average LTI has risen).

But leverage could flow from facilitating/bringing forward more purchases by higher income earners with lower saved deposits; adjusting the income profile of a FTB. Increasing numbers of new >25y term mortgages & lower LTV attracting lower rates may also impact.

Agreed, MMR is likely to be a limiting factor in many cases. However, the theoretical possibility remains, and in some cases it could, as you say, bring forward a purchase or help some buyers get bigger mortgages. It could also start a bit of a rush if potential FTBs get the sense that this is a time-limited offer.

[Dorkins]

Where's this amazing Tory gift for reinvention and renewal we kept hearing about after the 2017 general election? Seems like the plan is to just keep fiddling around to give the impression of action until demographic turnover boots the Tories out of office for a couple of decades/forever.

[guest_northshore]

12 minutes ago, mattyboy1973 said:

Agreed, MMR is likely to be a limiting factor in many cases. However, the theoretical possibility remains, and in some cases it could, as you say, bring forward a purchase or help some buyers get bigger mortgages. It could also start a bit of a rush if potential FTBs get the sense that this is a time-limited offer.

Yep. The first home buyer stuff in Oz didn't exactly do wonders for affordability.

[BorrowToLeech]

2 hours ago, mattyboy1973 said:

THe point is that stamp duty is paid in cash that could otherwise be added to the deposit, so in theory this could be levered up - perhaps many times. E.g. Let's say you are a Londoner buying a 300k house with a 5k stamp duty liability. You've saved a 30k deposit and got a 90% LTV mortgage. With the 5k savings you now have a 35k deposit and could (perhaps) now buy a £350k house with a 90% LTV.

The evidence is pretty conclusive: reductions in stamp duty will quickly be added to the cost of the house. In some cases, the price went up by slightly more than the tax reduction, but not much. That's probably noise rather than a real effect. 

I kink the reason that the leverage effect doesn't come into it, is because there already are investors who are unconstrained by leverage, deposit requirements or anything.  If a house was 'worth' 20% more, except for the 5% stamp duty, someone - banks, money launderers, BOMAD, whoever - would be heavily exploiting that arbitrage until it went away.

Anyway, whatever the explanation, the facts are pretty clear.

 And you can be sure that the property investing chancellor and all of his cronies know this very well. They'll have been told explicitly by the civil servants, and it would have been on the PPE course they've all taken, so know they are lying when they deny it.  

[Freki]

23 minutes ago, DrBuyToLeech said:

The evidence is pretty conclusive: reductions in stamp duty will quickly be added to the cost of the house. In some cases, the price went up by slightly more than the tax reduction, but not much. That's probably noise rather than a real effect.

I wonder about that... Are Ftbs a significant enough group to affect the market? They are far from being the top marginal buyers. 

And as for arbitrage, the market is too illiquid at the moment to have full arbitrage come into force.

[nothernsoul]

Removing stamp duty just means the money goes to the seller instead of the treasury and props up prices, however, it is difficult to gauge by how much. Even if prices remained static you would never know if they  might otherwise have fallen without the change in policy. 

It is no coincidence this policy is being mentioned just as the housing market shows obvious signs of freezing up. The last time the market was in the same sittuation osborne introduced help to buy. 

[BorrowToLeech]

27 minutes ago, Freki said:

I wonder about that... Are Ftbs a significant enough group to affect the market? They are far from being the top marginal buyers. 

And as for arbitrage, the market is too illiquid at the moment to have full arbitrage come into force.

1.  I don't know, but I suspect not.  See my first post on this thread. If limited to first time buyers, it may not be too bad, but it is hard to say.

2.  Liquidity and volume aren't the same thing, I think any underpricing of houses would quickly be bid out of the market.  

In any case, the observation that stamp duty style taxes are efficiently passed on to sellers doesn't rest on my attempt at an explanation. 

Edited November 15, 2017 by DrBuyToLeech