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Mortgage Blog: First-Time Buyers Facing Double Blow

Confidence in the UK property market has been high in the early part of 2012. Figures in Mortgage Introducer show that new sellers’ asking prices are up 1.6% in March, while online searches for homes have also risen sharply. However, could this confidence be about to seep away from the market? Experts are worried that first-time buyers face a double whammy which could dampen their apparent increased enthusiasm to buy. Stamp Duty exemption to end while prices rise After a strong start to the year, the property market is facing a double threat. Mortgage Introducer reports that first-time buyers “are now faced with the double blow of losing their 1% Stamp Duty exemption between £125,000 and £250,000 and asking prices circa 3% higher than a year ago on their target market of terraces and flats”. Property expert Miles Shipside believes that the Stamp Duty exemption has been good for the UK property market. He says: “The Stamp Duty holiday was designed to promote activity in the moribund housing market, helping first-time buyers to get onto the housing ladder, and as a consequence releasing others to climb up the rungs too. With some promising indicators of activity so far in 2012, there are finally some signs that this is playing an important role.” The incentive which exempts first-time buyers from paying 1% Stamp Duty on properties between £125,000 and £250,000 ends in March 2012. Keith from whathouse.co.uk believes the end of the Stamp Duty holiday could have a negative impact. He says: “There has been an increase in first-time buyer activity over recent months but we’re concerned that the market is set to slow again. The end of the Stamp Duty exemption will add between £1,250 and £2,500 to the cost of buying a home for first-time buyers. With prices already higher than a year ago, it simply represents several thousand pounds more that people need to find to get onto the property ladder.” He goes on: “While the NewBuy Guarantee offers more high loan-to-value mortgages, first-time buyers now face a Stamp Duty bill. The Government seems to be simultaneously helping and hindering first-time buyers.” It has been a positive start to 2012 with asking prices for homes averaging 2.2% higher than a year ago. However, with around two out of every five sellers in the UK in the £125,000 to £250,000 bracket, the removal of the Stamp Duty exemption may hit the property market hard. Shipside added: “It’s a kick in the teeth if you have saved hard, or begged and borrowed a meaty deposit and have just missed out on the bonus of avoiding Stamp Duty.”

Whathouse.co.uk is a leading new homes portal offering listings and advice to property finders across the UK. Find a Property in the UK from all major housebuilders building new retirement homes and affordable new homes including government schemes such as FirstBuy and Shared Ownershipjust host promotional code