First-time buyers rush to beat expiry of stamp duty holiday

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The Independent Online

First-time buyers spent £2.3bn getting on the property ladder in December – a 10 per cent rise on the previous month – in an attempt to take advantage of the stamp duty holiday which ends next month.

The Council of Mortgage Lenders said yesterday 18,700 loans were made to new homeowners in the last four weeks of 2011.

The CML said it expected that trend to accelerate before the stamp duty exemption – which allows first-time buyers to avoid the 1 per cent duty on homes costing less than £250,000 – ends at the start of March.

It said the proportion of properties costing less than £250,000 snapped up by first-time buyers grew from 50 per cent to 53 per cent during December.

Paul Smee, the CML's director general, said: "We have been expecting a flow of first-time buyers on to the market as the stamp duty exemption ends in March, and December's figures appear to show this has now begun.

"The market in 2011, while still subdued, saw a welcome increase in annual gross lending for the first time since 2007, when the financial crisis began. With the eurozone problems still rumbling on, however, we believe there is still a real risk that this year's lending levels will be lower than those seen in 2011."

The overall UK property market was almost unchanged in December from a month earlier.

Buyers organised 47,400 mortgages worth £6.9bn, a 1 per cent increase in volume but no change in value from November. Remortgages fell by 15 per cent in December, as the deterioration in the economy made a rise in interest rates seem a long way off.

Jonathan Samuels, the chief executive of Dragonfly Property Finance, said: "In such a tough market, it's no surprise that first-time buyers are using every single support that's out there. For many people, 2012 will be a year of sitting on hands."