Britain’s housing crisis is being tackled with a string of measures and financial support, the Chancellor claimed in his Spring Statement today.
He suggested that 60,000 first-time buyers have avoided paying stamp duty since he abolished the tax in November for those purchasing homes under £300,000.
Buyers of properties up to £500,000 have also benefitted from the change introduced in the Autumn Statement last year.
But accountants Block Rothenburg suggested the tax cut could cost taxpayers as much as £1billion in the first year.
The Chancellor claimed 60k first-time buyers have avoided paying stamp duty since he abolished the tax in November for those purchasing homes under £300k
At the Autumn Budget last year, the Treasury had estimated the cost to be £125million for the same period.
But Nimesh Shah, a partner at accountants Blick Rothenberg, said: ‘Today’s claim by the Chancellor that 60,000 first-time buyers have already benefitted suggest that the Government’s original figures were significantly under-estimated.’
He explained that the tax relief is worth up to £5,000 saving in Stamp Duty.
It means that it has cost the Government up to £300million if 60,000 first-time buyers have already benefitted – and it will cost £1billion in the first year by extrapolating the first four months.
Philip Hammond also confirmed a package of financial measures in the Spring Statement today to help build more homes.
These include £4.1billion being distributed to 44 local authorities via the housing Infrastructure Fund and £220million being spent on supporting small house builders
He also announced a £350million investment for a housebuilding programme in the West Midlands.
And London is to receive £1.67billion to spend on 27,000 additional affordable homes by the end of 2021-22.
Philip Hammond also confirmed a package of financial measures in the Spring Statement to help build more homes
It comes amid concerns about plans for new homes being approved but not being completed – something that may be affecting the supply of homes available.
Sir Oliver Letwin is undertaking a review into the problem and is expected to publish his findings at the end of June.
Jeremy Leaf, a north London estate agent, said: ‘We welcome the Chancellor’s reiteration of the importance of the housing market and how tackling the housing crisis is key to all other economic policies, with particular reference to longer-term building projects and trying to address capacity issues by giving further assistance to apprenticeships.
‘However, at grass roots level what we are really lacking is supply and transaction numbers.
‘If these were to be improved, on the one hand it would keep property prices in check and on the other it would generate real benefits for not just the housing market but for the economy as a whole.’
He added: ‘The stamp duty concessions have definitely prompted more interest among first-time buyers, who are often taking the place of investors at the lower end of the market.
‘But further help is needed to make a real difference, not just at the bottom end of the market but right through to the top end if we are to achieve genuine growth.’
Shaun Church, director of mortgage brokers Private Finance, said: ‘The cut to stamp duty is helping to ease the climb onto the property ladder for thousands of first-time buyers.
‘However, existing homeowners have been left out in the cold.
‘With no sign of stamp duty reform for those further up the ladder, the prohibitively high cost of moving is continuing to dampen activity at the upper end of the property market.
‘While this might not seem like a problem for ordinary buyers, a healthy market requires plenty of movement at all rungs of the ladder.
‘A blockage at the top will have a trickle-down effect, as those who want to upsize may struggle to find any properties available, which will in turn impact those further down the chain.’
Vicky Fowler, partner and head of planning at Gowling WLG said: ‘It’s heartening to see the Government supporting the UK housebuilding industry in meeting market demand for housing development, especially on the back of the NPPF launch.
‘However, history tells us that a good start can often lead to diluted implementation where housing is concerned, so staying on track is essential.
‘The Government must continue to take progressive action before the budget to ensure new schemes are feasible, viable and supported within the planning system.’
Will building more homes make house prices cheaper?
We have a housing crisis. What’s the answer? Build more homes.
Or is it? Because once you start digging into the subject, this housing crisis is a pretty ill-defined problem – and it’s not clear that a lack of homes is causing the problem of too high house prices.
Many people suspect that actually it’s too much cheap money.
On this week’s This is Money podcast, Simon Lambert, Lee Boyce and Georgie Frost get stuck into the housing crisis: what the problem is meant to be, what made homes so expensive, what the plans are to solve the issue, and whether building more homes will make house prices cheaper.
Press play to listen to the show above, or listen (and please subscribe if you like the podcast) at Apple Podcasts, Acast and Audioboom or visit our This is Money Podcast page.