First-time Buyers
Stamp duty costs hindering three-in-four homebuyers
Wannabe homebuyers trying to scramble on to the property ladder are struggling to save enough money to cover both the deposit and stamp duty costs, according to new research.
The study by Money Supermarket found the added burden of stamp duty in a market of rising house prices is hindering a staggering 77% of people.
Under current rules, anyone buying a property costing between £125,000 and £250,000 must pay 1% of the price in tax. This leaps to 3% for houses above £250,000 and up to £500,000.
The survey found 57% of people will need to save for longer than planned to cover stamp duty fees, while a further 20% will rely on someone else to help meet stamp duty costs.
The average deposit potential homebuyers currently have saved is £9,734. However, with the average UK house price topping £183,577, according to Nationwide, this is less than a 5% deposit once the 1% stamp duty cost of £1,835.77 has been deducted, leaving the average buyer ineligible for a mortgage to buy a house in today’s market.
The research also found that 49% of those currently saving for a deposit have been doing so for under five years, while a further 22% of people have been squirrelling money aside for between six and 10 years. A third of those continuing to save expect to need a further five years to reach the level of deposit they need, while one in five will still need another six to 10 years.
Clare Francis, editor-in-chief at Money Supermarket said: “Home ownership is something millions of people aspire to so it’s encouraging to see people are saving hard towards the goal of one day getting a foot on the property ladder, but it can seem like a relentless task. And with house prices rising again in many areas, that goal is being pushed further and further away.
“On the plus side, the deposit requirements have eased. There are more 95% mortgages available than there were a year ago, helped by the launch of the mortgage guarantee element of the Help to Buy mortgage scheme in January.
“This is enabling first time buyers to get on the property ladder sooner because they don’t have to save such a large deposit. However, with the current average deposit level sitting at less than 4.5%, many aspiring homeowners still don’t have enough saved.”
