The Evening Standard has reported today that the government is considering proposals to cut stamp duty for first time buyers, in an effort to redress the balance for the millennial generation struggling to get on the property ladder.
I truly welcome measures to help the younger generation get on the property ladder. But this can only happen if there are more houses on the market - otherwise competition for existing property just increases, driving prices up and even further out of reach. Following the short stamp duty holidays in 2008-9 and 2010-2012, research by Savills showed that there was little evidence of a general increase in activity during the stamp duty-free period, but there was a rush at the end where buyers sought to take advantage on the rule before it was scrapped. The main impact appeared to be on the timing of purchases. (https://www.theguardian.com/money/reality-check/2015/apr/27/will-scrapping-stamp-duty-first-time-buyers-push-up-house-prices).
Any reductions in stamp duty must go hand-in-hand with measures to get houses built. Our own research has showed a huge increase in the number of planning applications in London for the first half of 2017. (http://www.grantthornton.co.uk/en/news-centre/london-has-opportunity-to-reverse-housebuilding-shortfall/).
With the right measures, there is an opportunity to reverse the housing shortfall. Providing a clear, certain and fair tax framework for investors and housebuilders in UK property must still remain top of the agenda for this year's Budget . This must also come alongside encouraging investment in other housing models, such as PRS and co-living, to provide other viable options to home ownership in the UK for the millennial generation.
Cutting stamp duty is among ideas put forward by backbenchers that are being considered in detail. At the same time, No 10 is pressing Transport for London and other public bodies to release unused land for homes to be built on. “The Budget is a good opportunity to seize the political initiative domestically through bold measures on issues like housing,” said a Tory source.