Call for rethink on first time buyers relief
1 Feb 2019
HMRC reports more than 241,000 first time homeowners have pocketed the cash they would have spent on stamp duty land tax (SDLT), saving a total of £570m since first time buyers relief (FTBR) was introduced, but the Association of Accounting Technicians (AAT) has branded the scheme ‘costly and bureaucratic’
1 Feb 2019
FTBR, was introduced on 22 November 2017; and new quarterly figures show first time buyers saved £144m between October and December 2018.
The tax relief can be used when buying a residential property where the purchase price is no more than £500,000 in England and Northern Ireland, as long as the purchaser does not own any other properties and intends to use it as their main residence.
In the Budget, the relief was extended to first time buyers purchasing through approved shared ownership schemes who choose to pay SDLT in stages, rather than on the market value of the property. This has been retrospectively applied to eligible property transactions since last November.
The relief was claimed in 60,700 transactions, in the fourth quarter of 2018, an increase of 3% compared to the previous quarter.
Mel Stride, financial secretary to the Treasury, said: ‘These statistics show the value of government help for first time buyers. Over the last quarter 60,000 new homeowners got help to realise the dream of property ownership.’
However, AAT points out that a simpler, fairer, cost-free alternative would be to switch SDLT liability from the buyer to the seller.
Treasury forecasts suggest that FTBR will cost the taxpayer £670m by 2021-2022, with an additional £5m a year cost following its extension to shared ownership properties last year.
AAT argues that as well as being very costly to the taxpayer, it is unlikely to help most first time buyers in the most populated parts of the country - London and the South East - where the average house price in July 2018 was £485,000 and £327,000 respectively.
Phil Hall, AAT head of public affairs and public policy, said: ‘Switching stamp duty liability from the buyer to the seller isn’t a silver bullet for our myriad housing problems but it would make the system fairer because those moving up the ladder would be paying duty on the lower-priced house that they are selling, not the higher-price one they are buying.
‘It would also remove every single first-time buyer from liability, irrespective of the cost of the house they are buying.
‘It’s important to highlight that this change would save the taxpayer huge sums of money – almost £700m a year – whilst simultaneously protecting the billions of pounds stamp duty raises.’
Report by Pat Sweet