Stamp duty reduction for FTB’s announced in last Autumn Budget likely to increase prices.
Today 22nd January 2018 – The Treasury Committee publishes a unanimously agreed report on the Autumn Budget 2017.
In the report it highlights that the stamp duty reduction for first-time buyers (FTB’s) announced in the Budget is likely to increase the prices paid by such buyers.
In the summary it stated: The Chancellor abolished Stamp Duty for first-time buyers (FTB’s) on the first £300,000 of any property costing up to £500,000. The Office for Budget Responsibility (OBR) forecast that just 3,500 additional first time buyers over the forecast period will become FTB’s as a result of the policy change, at a cost of £3 billion. In isolation, the reduction in Stamp Duty is likely to increase prices for FTB’s by as much, if not more, than the amount they will save as a result of the reduction in Stamp Duty.
Also highlighted is: The Local Authority Housing Revenue Account borrowing cap should be removed to help meet target of 300,000 new homes per year.
In the summary it stated: Local authorities are limited in how much they can build through the cap on borrowing within Local Authority Housing Revenue Accounts. In Autumn Budget 2017, the Government raised the borrowing cap for councils in areas of high affordability by £1 billion to help achieve its target of 300,000 new homes per year. Private housebuilders have consistently provided 150,000 units per year, so the target is unlikely to be met without a significant increase in supply by local authorities. To achieve this, the Housing Revenue Account borrowing cap should be removed. At the very least, the Treasury should define the allocation criteria for the additional £1 billion more clearly.
Commenting on the Report, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:
“The Chancellor pledged to ‘fix the broken housing market’, but the Government is going to find it very difficult to meet this ambition. The increase in the cap on borrowing for local authorities to build homes is a step in the right direction, but it doesn’t go far enough.
“The borrowing cap restricts the number of homes that local authorities could deliver. To achieve the Government target of 300,000 new homes per year, the cap should be abolished. The potential of local authorities to build should be unleashed.”
Read The Treasury Committee’s unanimously agreed report on the Autumn Budget 2017 published 22nd January 2018 in full click here.
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