Following the Stamp Duty threshold returning to 2014 levels today, Mortgage Advice Bureau (MAB) has called for action to help aspiring homeowners to get onto the property ladder.
From today, homebuyers will start paying 2% Stamp Duty on properties over £125,000 – a threshold which was set back in December 2014 when the average house price in England was £191,986, with a tax bill £1,340.
Coventry Building Society has calculated that buying an average priced home in England today comes with a price tag of £291,397 and a tax bill of £4,569. That’s a £3,229 (241%) increase in Stamp Duty on an average priced home in England since the thresholds were set.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “Reverting to the 2014 thresholds is a major step backwards, given that house prices have soared over the past decade. The thresholds simply aren’t in sync with current property values.
“For buyers, this means additional costs at a time when affordability is already stretched. The government should consider updating the thresholds to reflect inflation and house price growth or risk further distortions in the housing market and a real squeeze on prospective homebuyers.”
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau (MAB), argues that action is needed to keep prospective first-time buyers’ dreams alive.
She said: “With 41% of our prospective buyers stating that the latest Stamp Duty changes may prevent them from purchasing a property in the next 12 months, it’s clear we need to pursue other avenues to get more aspiring homeowners into the market. As things stand, today’s relief removal could lead to house prices dropping as demand for properties falls, with an increasing number of first time buyers priced out of the market.
“People’s borrowing abilities, goals, and lifestyles have evolved, yet our lending rules remain static, with many prospective buyers penalised by current stress testing and affordability criteria. From adjusting LTI caps to enhance borrowing power, to providing additional 95%+ LTV lending to help those with smaller deposits, there are so many ways we can get more first time buyers the helping hand they need to become homeowners.
“That being said, it was promising to see the FCA openly criticise lenders as being ‘too cautious’ when approving mortgages for first-time buyers. There’s already some level of flexibility with stress testing that isn’t being taken advantage of, and this was rightly called out. All eyes are now firmly on the lender community to take this on board, embracing innovation and a forward-thinking approach to get more first time buyers on the property ladder.”
