Alliance & Leicester Mortgages lobbies the Government for first time buyers to be exempt from paying stamp duty
Ninety per cent of first time buyers are likely to pay stamp duty on their homes by 2008, according to Alliance & Leicester Mortgages. The bank forecasts that nine out of ten (90%) first time buyers will have to pay the tax within just three years based on current trends, with this hitting 95% by 2011, making the first step onto the property ladder more and more difficult.
Recent research conducted by Alliance & Leicester revealed that stamp duty is a financial burden for the first time buyer. In fact, one in four (25%) first time buyers who bought a property in the last 12 months, found that the cost of stamp duty was a major obstacle to getting onto the property ladder.
The nil-rate threshold of £60,000 has not been raised since 1993 when the average first time buyer house price was £44,000’. Today the average price is £145,408” and the percentage of first time buyers affected by stamp duty has trebled in the last seven years. Whereas in 1997 just over 25% of first time buyers paid stamp duty, 75% of first time buyers pay stamp duty today.
To help combat stamp duty woes, Alliance & Leicester is launching a new mortgage product primarily aimed at the first time buyer and designed to help them cover the cost of stamp duty. The buyer will receive £1,500 cashback for loans between £25,000 - £100,000 and £2,500 cashback for loans between £100,001 - £250,000, with the cashback linked to the size of the loan.
Other benefits of The First Step Mortgage include:
Fixed rate of 5.99% for 3 years
No product fee
Free valuation (refunded upon completion)
There is an early repayment charge of 3% of the outstanding balance if redeemed before 31 May 2008.
Stephen Leonard, Director of Mortgages, Savings & Investment Products at Alliance & Leicester, said: “Alliance & Leicester’s research findings show that the cost of stamp duty is a real issue for first time buyers.
“More needs to be done to address the concerns and burdens of first time buyers. For this reason, I have written to the Chancellor, Gordon Brown, to urge him to consider scrapping the tax for first time buyers. Stamp duty was never intended to be a prohibitive tax and with the first time buyer market activity at a 20 year low, it seems this group of people could do with a helping hand.
“The new mortgage product from Alliance & Leicester called The First Step Mortgage will go some way to help first time buyers with the cost of stamp duty and should appeal to those who also want a competitive rate.”
