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Stamp duty concession had mixed effects across the UK


Published: 31 May 2012 | Author: Bernard Clarke

Recent data show that the concession on stamp duty for first-time buyers, which ended on 24 March, appears to have had a mixed effect on activity in each of the three smaller countries of the UK.

  • In Scotland, the effect of the concession, which temporarily increased the stamp duty threshold for first-time buyers from £125,000 to £250,000, appears to have encouraged them to buy higher-priced properties than usual. Our figures showed that in the first quarter of this year 38% of Scottish first-time buyers bought homes for between £125,000 and £250,000, the highest proportion since records began in 2005. Lower house prices in Scotland usually mean that only around 35% of first-time buyers purchase in this price band, compared to 50% for the UK as a whole.
  • Our figures showed that first-time buyers accounted for 42% of Scottish house purchase loans in the first quarter of this year – the same as for the UK as a whole, but the highest proportion in Scotland since 2001.
  • The majority of first-time buyers in Wales buy homes for less than £125,000, so the end of the stamp duty concession appears to have had a more limited impact on activity there. Our figures showed that 58% of Welsh first-time buyers paid less than £125,000 in the first quarter.
  • On average, first-time buyers in Wales borrowed a higher proportion of the value of the property than in the rest of the UK. At 85%, the proportion was up from 83% in the preceding quarter and compared to 80% for the UK as a whole.
  • In Northern Ireland, first-time buyers took out 60% of all loans for house purchase, up from 58% in the final three months of last year and the highest proportion since 2001.
  • Despite the increase in the first-time buyer share of the market in Northern Ireland, there is little evidence that the stamp duty concession boosted activity there. Three-quarters of first-time buyers in Northern Ireland bought properties for less than £125,000. The average amount they borrowed was just over £73,000, down from £80,000 a year ago and a peak of £122,000 in 2007.

In the UK as a whole, the first-time buyer concession appears to have delivered a significant boost to activity, particularly in the final month leading up to the deadline. But the impact may largely have been to bring forward purchases, and it is unclear what effect this will have on first-time buyer activity in the coming months.