However, this is far from being the only political issue that will impact on the UK property market in the next 12 months. In the Autumn Budget, there was a slight surprise with the announcement that stamp duty would be abolished for first time buyers purchasing a home at less than £300,000.
This was initially seen as a positive move. The government stated that the removal of stamp duty was carried out with the intention of helping first time buyers get on to the property ladder. Most people understand the difficulties that first time buyers face when looking to get on the property ladder, which makes this assistance very welcome.
The Office for Budget Responsibility raised concerns
However, there was some opposition to this move. Within a very short period of time, the Office for Budget Responsibility raised concerns about the removal of stamp duty for first time buyers. The OBR stated that this move would lead to an increase in property prices. With predictions of a like for like basis occurring, many people believe that any financial benefit from the removal of stamp duty has been balanced out by the additional cost of buying a home.
Even if this turns out to be the case though, there will be a benefit to first time buyers. This is because the stamp duty cost is an upfront cost that has to be paid at the time of purchase. The removal of this cost should ensure that buyers have additional money they can use at this time, and it would be sensible to place this money towards the deposit. The larger the deposit, the better it is for a buyer. This can be seen in being offered a more attractive mortgage offer or even being offered a mortgage in the first place.
Mortgage lenders may take a stricter stance on applications
Of course, some mortgage lenders may consider the fact that property prices are set to increase and then review mortgage applicants to a stricter level of criteria. There have already been changes to the way mortgages are reviewed and it may be that the recent changes will lead to some applicants struggling to obtain an affordable mortgage.
Depending on your outlook, the Autumn Budget stamp duty cut may be positive or negative. Even if you form the opinion that property owners benefit from a higher sales price, this is only true if they don’t have to buy a new property. If the seller is also buying property, they’ll find that they will likely have to pay more for that purchase, negating any initial benefit they may have received.
As is often the case with the property market, it is difficult to say what the impact of significant changes will be. At Oaks Estate Agents, we understand why some first time buyers are optimistic about the removal of stamp duty but of course, the situation is slightly different in Streatham and London thanks to the higher average price of property.
No matter what your situation is, if you are looking for guidance or support in the local property market, come and speak to Oaks Estate Agents.