Tuesday, Mar 20, 2007
Should FTBs be exempt?
Firstrung: Should the stamp duty exclusion band should be based on average house prices?
With the Chancellor announcing his Budget this week, mortgage brokers up and down the country would like to see an increase in the stamp duty exclusion band in line with the average national house price, according to research by GE Money Home Lending. The rise, if it were implemented, would take the exclusion band from £125,000 to just over £200,000 - an increase of more than £75,000 - and would save a buyer over £2,000.
Posted by converted lurker @ 11:36 PM (175 views) Add Comment
16 Comments
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1. David20040_0 said...
If it is increased watch house prices rocket again.
2. george monsoon said...
Thats it, just keep the the ball rolling and push prices higher..!!!
I personally would like stamp duty scrapped, but at the moment, I don't want it to go anywhere at all.
3. converted lurker said...
I'm not so sure George, in my opinion it would help FTBs compete with BTL investors who have been snapping up FTB property and pushing up that price bracket over the past 4 years. If BTL was then taxed at source/and or retrospectively it could get interesting...
4. nearly30 said...
Personally I would not be surprised if stamp duty was raised.
Yes FTBs will benefit to some degree - but with the numbers of BTL and Buy-To-Leave-Vacant purchasers out there (see NEC Property Investment Show 23rd to 25th March - mmm any conspiracy there?) - the good old FTB will not be quick enough to take advantage - the bubble will just keep inflating IMHO.
See for a scare: http://www.propertyinvestor.co.uk/birmingham/
The quote that made me mad - makes me want to start a 'Houses for Homes Not Profit' campaign!
"You don't have to be a professional to come to the show. If you are just getting started will find The Property Investor Show an invaluable resource for planning your first investment and helping you to make the most of the property opportunities open to you. You can listen to and talk to industry experts - and use these sources to make informed decisions about your first property acquisition"
AAAHHHHH!!!!
5. paul said...
How about this - raising the duty threshold but mandating that a buyer has to be a FTB to take advantage of it?
Second thoughts - that's far too equitable and logical.
6. converted lurker said...
If rates creep up, causing BTL to (for the most part) die, then FTBs could with a 2k incentive begin to see parity. However, for real partiy to take place the govt would also have to retrospectively tax second home owners which will happen in the next few years IMHO.
7. geed said...
Paul - your an idiot ;)
In Australia they offer a First time buyers grants in some states, works well you would think until you realise once it has arrived in your bank account you basically have to return it again to the government as stamp duty. Based on the average cost of a home in Melbourne you would be paying more on top of the grant value back to the government. Its stupidity beyond belief and a classic case of give with one hand and take with the other.
8. Sam said...
how about this, stamp duty should be paid by the seller?
9. European-bear said...
Anything that makes property "more affordable" will just push up the prices. When demand outstrips supply the price rises to get rid of the excess demand. Increases in stamp duty threshold will help no one (except inflate prices for those who already own a house). Just like tax relief on mortgages helped no one (it just made prices higher). Grants to help first time buyers help no one (they did it in Ireland)...it just pushes the price up. Cheap credit helps no one...the same people end up buying, paying the same to the bank each month but with a huge debt around their neck (thats why the banks like it). What is required:
1. High property taxes on all residential property. 90% rebates for owner occupiers (as in the USA). That will squeeze second home owners
2. Massive increase in stamp duty (possibly as a temporaray measure until the crash sets in).
3. Capital gains tax on all residential property to remove the pervese incentives to invest in your home (then people will buy homes to live in and not as investments) rather than more productive things in the economy such as manufacturing
4. Increases in interest rates
5. All tennants to pay the basic rate of tax out of the rent to the inland revenue (22%). Landlord can then only claim it back at the end of the tax year with proper certification of interest paid etc. This is now the case in the UK if the landlord is living overseas. Will help prevent tax evasion or avoidance and have a detrimental to landlord's cash flow.
It is much better to have low capital debt and high interest rates, then high debt and low interest rates (given that you pay the same on either)....the market will dictate what can be afforded. But with low debt any savings and capital repayments will make a big dent in the debt....not so with the high debt scenario....
Comments?
10. rich said...
Paul, I don't agree. Reducing stamp duty for FTBs is just propping up house prices at the expense of the taxpayer. The reason first time buyers have problems getting onto the ladder is that houses are vastly overpriced. If you start subsidising them then it'll just take longer for prices to come back to normal.
11. paul said...
no geed, you're the idiot.
There is a big difference between a grant disguised as a loan and a tax concession.
You can blame Australian independence if you like.
(Even though you keep the Queen's head on your coins).
12. Ianbeale said...
just make the seller pay the tax and not the buyer taht way GB is happy and FTB is happy, would also encourage sellers to keep their price at certain pricepoints.
13. nearly30 said...
Rich - I agree - stamp duty is here and is useful 'valve' to stop anymore rampant HPI - however if it is increased - then OH DEAR!!!
FTBs are only having problems because of overpriced houses and affordability.
The stamp duty may actually work to deter BTL et al. from doing more damage than they already have.
With stamp duty going up - it may usher in a new era for FTBs - 100 year mortgages, 6/7/8 X income multiples (or 5X on dual incomes) - basically the whole mortgage market will love the free-ing up of the lower end 'broad-based' part of the housing market. IMHO you may even see BTL / BTInvesters - selling up to capitalise (especially before HIPs come in!)
14. Dugmug said...
"Clearly brokers feel that stamp duty is a key concern for their customers." No, the key concern for their customers is that HOUSES COST TOO BLINKIN' MUCH! But lets not mention that, got to keep the gravy train rolling, eh?
"As lenders it is important that we continue to develop innovative ways of helping first-time buyers take that much desired step onto the housing ladder." I love how finding new ways to justify squeezing more and more interest out of people less and less able to afford it is euphemistically called "innovative ways" - what a piece of spin to make it look like the mortgage industry is doing its customers a favour, rather than just helping themselves make more money! Brilliant!
I've said it before and I'll say it again - Firstrung like to appear to be on the side of FTBs because that's their target audience of course, but see how much advertising they have on their website from mortgage companies! Vested interest? Look out for this bias in their articles - Firstrung are not our friends.
15. geed said...
Paul - apologies, my sarcasm appears to have been lost, although I dont agree with your suggestion for reasons already posted on here by others, my intention was not to offend. I was merely pointing out that fact that you were trying to be "equitable and logical" in a world which is anything but!
Note to self - Often sarcasm is lost in text.
16. paul said...
geed, sure no problem - I see now what you meant. My apologies too.