(6 years, 7 months ago)
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My hon. Friend is absolutely right: it is saving up for the deposit that is so challenging for many young people nowadays. Added to that are the solicitors’ costs and the stamp duty costs, which can sometimes make it too difficult for first-time buyers to raise the adequate amount. Incorporating that into the mortgage would be much better, from the purchaser’s perspective. One of the important points that the Yorkshire Building Society makes is that the mortgage would cover the costs if there were a small increase in the price of the property.
I congratulate the hon. Gentleman on securing the debate. I just seek some clarity about what level of cost of home the stamp duty relief, transferring to the seller from the buyer, would operate on, in the light of the Government’s stamp duty relief for first-time buyers. At what price range will that start to support the first-time buyers he is talking about at the moment?
The hon. Lady is absolutely right: the changes that the Government introduced undoubtedly helped many first-time buyers. I fully acknowledge that, and they have gone a long way to taking most first-time buyers out of potential stamp duty. There are some practical issues about identifying who is a first-time buyer. What I am suggesting simplifies the process. It takes every first-time buyer out of the tax regime, and I will come on to some of the other benefits that I foresee.
If somebody wants to move up the chain by selling their smaller house and moving on to a bigger house, because they have a growing family or for other reasons, they would benefit quite significantly from the change. They would still have to pay stamp duty, but it would be on only the lower-valued property. The higher-valued property would not be paid for by them. There would be a clear saving for somebody who was moving up the housing ladder. That would help growing families who wanted to move to a larger property.
We now come to the specific question of who pays. As I have suggested, it should be the seller. People often say, “There will be an immediate increase in prices.” I am not convinced about that. I think that the market will adjust naturally. Indeed, when stamp duty was increased by 3% for the purchase of second homes, I do not think that we saw a rigid decline of 3% in house prices. I suspect that the market will adjust and take care of the potential—I believe small—increase.
Overall, I think it will help the market. We have to realise that those who will pay—that is, sellers—are often in a better position to pay the tax. Many of the people who will be selling will have benefited from many years of increasing house prices, so will have sizeable equity in their property and be more capable of dealing with an increase in the price.