Autumn Budget 2017: Philip Hammond's big stamp duty announcement will actually cost first-time buyers

 
Catherine Neilan
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Chancellor Leaves Downing Street For Budget Speech
OBR: It will allow FTBs to buy properties - but more expensively (Source: Getty)

Philip Hammond's big housing announcement was met with cheers in the House of Commons this afternoon - but the measure is already unravelling.

The chancellor this afternoon announced he was abolishing stamp duty for first-time buyers on properties worth up to £300,000, with buyers of properties worth up to £500k also benefiting from the zero duty up to the new level.

This was part of a £44bn package designed to help the government tackle the housing crisis, something which Prime Minister Theresa May has said is a personal challenge.

During a post-Budget briefing with members of Hammond's team, however, it quickly became apparent that all was not quite what it seemed.

Firstly that £44bn package is not entirely new - in fact, just £15.3bn is "new money", and will be split over the next five years.

And when it comes to the stamp duty, the independent Office for Budget Responsibility warned it would increase house prices, by at least 0.3 per cent. "Thus the main gainers from the policy are the people who already own property, not the FTBs themselves," the report said.

"For some potential FTBs with smaller deposits, who are constrained by loan-to-value lending criteria, the relief will enable them to borrow a multiple of their SDLT saving, allowing them to buy properties that they otherwise could not afford - but more expensively."

The measure equates to a saving of around £1,660 on average, and the Treasury expects it to benefit one million people over the next five years.

But the same OBR report said "the costing assumes a small number of additional first-time buyer purchases (around 3,500)", suggesting it will result in a very small number of people who would otherwise not have bought a property getting onto the ladder.

The report also warns that non-first-time buyers could "abuse the relief", although Treasury spokespeople insisted this would be rigorously checked against and involve lying to lawyer "which is probably not a good idea".

The OBR concludes: "The measure is expected to increase house prices. It receives a "high" uncertainty rating."

Update: It's since emerged that more than one of Hammond's housing announcements has been filched from the manifesto of Ed Miliband.

In 2015, the former Labour leader proposed exempting stamp duty for FTBs in England, Wales and Northern Ireland on properties worth up to £300,000 - a measure which was attacked by the Tories as being unfunded.

Miliband also suggested acting on land banking - where property developers sit on land to drive prices up.

Today Hammond announced that Oliver Letwin was conducting a review into the issue, which will be delivered in the spring, and would "intervene" to put a stop to the practice if the review "finds that vitally needed land is being withheld from the market for commercial, rather than technical, reasons".

Shares in Berkeley, Barratt, Persimmon and Taylor Wimpey all fell between one and three percent in afternoon trading, making them the biggest fallers on the FTSE 100.

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