Budget 2017: What it means for first-time buyers in south London

The lead-up to the highly-anticipated Autumn Budget saw property experts make their predictions and forecasts. And now Philip Hammond's latest measures are out in the open, people are starting to make sense of the changes that will come into play over the next period.

The Chancellor delivered his second Budget on November 22 and declared a raft of changes. Key points included reforms in the housing market, investment in the NHS, extra money for Brexit preparations, increasing the UK National Minimum Wage and introducing the Millennial Railcard.

One of the most prominent changes for housing is the removal of stamp duty for all first-time buyer (FTB) purchases under £300,000 and the requirement for no stamp duty to be paid on the first £300,000 of FTB purchases costing up to £500,000.

This is great news for FTBs and will represent a genuine saving for many of those looking to take their first step on the property ladder.

The new rates for FTB purchases up to £500,000 are as follows:
Up to £300,000 purchase price: 0% stamp duty
£300,000.01 to £500,000: 5% on that portion of the purchase price only
The standard stamp duty system will still apply for FTBs if the purchase price above £500,000. Meanwhile, those who aren't buying their first property will also be required to pay the standard rate.

Although the change has been made with immediate effect in England, Wales and Northern Ireland, the Welsh government will need to decide whether to continue the new system when stamp duty is fully devolved in April 2018.

The Treasury calculated that this cut will mean no stamp duty for 80% of UK FTBs, saving the average FTB at least £1,640 in stamp duty on a property costing £210,000. This change also reportedly means a stamp duty cut for 95% of first-time buyers in the UK.

A separate analysis by a national estate agency revealed that the average FTB in London pays £401,403, while 40% of London FTBs pay under £300,000. This means that approximately 40% of London FTBs won't pay any stamp duty and the average FTB in London will only have to pay stamp duty on £101,403 of their purchase.

With some extra cash to spare post-Budget, competition in London will be high among purchasers. In a market where good homes tend to get snapped up in a matter of days, this will inevitably add pressure to demand.

This move will benefit sellers and potential sellers significantly, as FTBs who have pocketed up to £5,000 from the stamp duty cut will be more optimistic in their property search. To put this into perspective, a buyer interested in a £200,000 property will now be able to afford to pay an additional £1,500.

The Chancellor revealed other measures for the housing market, including the announcement that the government will provide £44 billion of capital loans and funding guarantees to build 300,000 homes every year on average by the mid-2020s - the highest number since the 1970s.

The Budget also confirmed a further £2 billion of funding for affordable housing, £28 million of support for community recovery for victims of the Grenfell tragedy, and an additional £10 billion for the Help to Buy Equity loan scheme to aid 135,000 more people buy new build homes - another victory for FTBs.

While these changes will not completely solve the housing market's imperfections, first-time buyers can agree that these steps are definitely heading in the right direction - and that's up the property ladder.

At Roy Brooks, we use our experience and knowledge to guide you through the buying and selling process in south London locations such as East Dulwich, Nunhead and the surrounding areas. To get in touch, please visit our contact us page.
Also, to find out how much your property would be worth on the current market, we can provide a free instant online valuation.