And recent statistics indicate that, in many areas, more properties are being sold as buy to lets than to first time buyers.
'This situation inevitably causes problems in the marketplace. It distorts house prices, and alienates a whole class of today's young people, who simply feel priced out of the housing market,' states Frankish. 'Given that many first time buyers struggle to save a sizeable deposit, they have to borrow a large proportion of the purchase price of their first property which, taking recent price rises into account, means they will find it difficult to make ends meet, especially if interest rates rise, as has been predicted.'
'In many regions, house price inflation has made it impossible to find a habitable property beneath £60,000 - the threshold at which stamp duty becomes payable. The result is that even the most modest starter home attracts a Government tax of at least £600. In many localities, the average first time buyer can be paying stamp duty of £1,500 or so to the treasury.
Of course, the Chancellor is reluctant to apply any form of indexation to stamp duty, as this provides a valuable source of revenue for Government coffers,' adds Frankish.'Recently, the National Association of Estate Agents called for the introduction of a fairer system, by suggesting that stamp duty should be
graduated. I can only reiterate this plea, and point out in addition that, since the £60,000 threshold has not been indexed for over ten years, it is now completely out of date. A decade ago, only a third of properties were subject to stamp duty; now it is 95 percent. If the Chancellor wants to maintain his budget commitment to 70% home ownership in this country, he
must act to make starter homes more affordable,' Frankish argues.
'I would go so far as to agree with the NAEA's call for stamp duty to be abolished for first time buyers to help them to gain a foothold on the home buying ladder, as well as supporting the housing market at the bottom. Unless we have a buoyant supply of first time buyers, it is unlikely that we will be able to sustain a strong housing market well into the future, regardless of what happens to interest rates. After all, what is the point
of the Government claiming to encourage first time buyers without offering them any genuine incentives?' he concludes.
