UK Housing Market
1 in 4 Brits Already Locked Out of Homeownership as Stamp Duty Costs Become Unaffordable
Stamp duty reforms could shatter homeownership dreams for the 25,000 first-time buyers racing to beat the deadline
David Hannah, Group Chairman of Cornerstone Tax, urges the government to scrap its stamp duty reforms and focus on addressing the wider housing affordability crisis
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"The previous government's decision to abolish Multiple Dwellings Relief (MDR) was beyond counterproductive and will result in fewer new homes being built..."
David Hannah
Home buyers across the UK are racing to complete purchases before the 1st of April stamp duty changes, which will see them paying thousands of pounds more in tax. Currently, buyers of homes worth up to £250,000 are exempt from stamp duty, however, this threshold will revert to £125,000 next month. First-time buyers will also be affected, with their exemption dropping from £425,000 to £300,000. This comes at a time when David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading stamp duty advisory firm, can reveal that 26% of Brits already aren't unable to purchase property due to unaffordable stamp duty costs underscoring the impact of impending reforms.
David, like many property experts, continues to urge the government to abandon its stamp duty reforms and instead focus on addressing the broader housing affordability crisis, which is placing immense pressure on the market. Cornerstone warns that lowering stamp duty thresholds will shatter the dream of homeownership for thousands of Brits, highlighting that 18% of first-time buyers were only able to get on the property ladder due to the previous government's stamp duty holiday. Additionally, the impact of the upcoming changes is already evident, with Rightmove reporting that 25,000 first-time buyers and 74,000 home movers currently in the process of purchasing a home may struggle to complete in time. Mortgage brokers have also seen buyers pulling out of deals due to fears of missing the deadline, while analysis from the Skipton Group reveals that the proportion of areas in England where the average first-time buyer home is subject to stamp duty will jump from 8.4% to 32%.
Though these reforms have yet to be implemented, the financial burden of these changes can be seen. First-time buyers who benefitted significantly from the pandemic-era stamp duty holiday now face tax bills of up to £6,205.
Cornerstone has also found that 14% of Brits have had to turn to short-term loans or emergency credit to cover unexpected stamp duty bills. With property transactions on the rise due to the stamp duty deadline, many Brits remain unaware of potential errors in one of the UK's least favourite taxes. A staggering 61% of homebuyers, equating to over 15 million people, have never even considered whether they overpaid or if a mistake was made in their stamp duty calculation. This lack of awareness is compounded by widespread mistrust in the legal sector, with 36% of Brits - around 9.6 million - feeling ripped off by solicitors during the buying and selling process. As more transactions take place, uncertainty around stamp duty persists, leaving many at risk of paying more than they should.
Group Chairman of Cornerstone Tax, David Hannah comments:
“This year, the governmentmust urgently recognise the ever-pressing need for drastic changes to the housing market. The previous government's decision to abolish Multiple Dwellings Relief (MDR) was beyond counterproductive and will result in fewer new homes being built, with a significant drop in both domestic and overseas investment into housing delivery.
“By removing a critical tax break such as MDR,the government's refusal to reverse this policy undermines the build-to-rent sector, which relies heavily on such incentives to maintain and expand the housing supply. Furthermore, the increase in the second home surcharge and Stamp Duty thresholds reforms will not only reduce the stock of homes in the UK, but will make it harder for first-time buyers to get onto the property ladder.
"New policies need to promote affordability, accessibility and support for businesses building in Britain.Thegovernmentmust now listen to property firms and industry stakeholders to solve this vitally discouraging situation for Brits, otherwise this crisis will continue to cause chaos for years to come."
David Hannah, Group Chairman
