Merits of stamp duty shake-up are still being debated

A lender has suggested that the flagship announcement from last week’s Budget may in fact have a limited impact.

Nationwide was assessing the effects of the Chancellor’s decision to abolish Stamp Duty for the vast majority of first-time buyers.

The leading lender has pointed out that many of those looking to get a foot on the ladder paid little or none of the tax, so the overall effect would be nowhere near as dramatic as had been trailed.

Robert Gardner, Nationwide’s chief economist, said: “The decision in the Budget to abolish stamp duty for first-time buyers… is likely to have only a modest impact on overall demand.

“The potential savings are more substantial for borrowers where house prices are higher, especially in London and the South East.”

When he outlined the changes, Philip Hammond insisted they would offer real help to many of those struggling to get a foothold in the property market.

Following on from his financial statement, he told BBC Breakfast: “Hopefully, by abolishing stamp duty, which will save the average first-time buyer about £1,700, that will be a help and an incentive to focus on getting the deposit together, getting the money together to get on the housing ladder, and we hope that many more young people will be able to get on the housing ladder.”

Although the Office of Budget Responsibility (OBR) has also called the policy into question, with the suggestion that the move could inadvertently push up property prices.

And Polly Neate, the chief executive of housing charity Shelter, had her own reservations.

“The Stamp Duty holiday focused on first-time buyers sounds positive on paper but realistically, this will only help a very small number of people who have already been able to save enough for a deposit,” she said.

“For most young people, home ownership has become a pipe dream and the high cost of rents has made it difficult for them to save.”

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