Tories applauded Chancellor Philip Hammond’s Budget plan to abolish stamp duty in order to help first-time home buyers – but according to experts, the move is likely to push housing prices higher.
The Office for Budget Responsibility (OBR) – the Treasury auditor – predicts that Hammond’s decision will probably ramp up prices up by about 0.3%, and will therefore mainly benefit those who already own properties. Some buyers with smaller deposits may be able to borrow more, “allowing them to buy properties that they otherwise could not afford – but more expensively”, the OBR says.
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But according to the OBR, the stamp duty tax break may result in as few as 3,500 additional home purchases every year, while costing the Treasury more than £3bn by 2022-23.
Meanwhile, the Financial Times says that Hammond’s move does “nothing to unlock an illiquid housing market, which means there is not just a shortage of new homes but also of the many more existing ones for sale”.
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