Savings from the stamp duty holiday have been cancelled out multiple times over by the rapid rise in house prices which has been fuelled by the tax break, Labour has said.
Lucy Powell, the shadow housing secretary, accused the government of worsening a housing affordability crisis by implementing the tax cut on home purchases that has fuelled a property price boom during the pandemic.
The party estimates that changes to stamp duty saved buyers of an average home £3,419. Meanwhile, official figures show that the average sale price of a property has soared £21,956 in the past year, pushing home ownership out of the reach of many.
Nationwide reported this week that prices have now risen even further, up 13.4 per cent in the year to June – the fastest rise since 2004.
The threshold for paying stamp duty was raised to £500,000 in a move the government said would help to restart the housing market after an enforced shutdown during the first wave of coronavirus.
It meant a tax saving of up to £15,000 for homebuyers. The threshold will be lowered to £250,000 from Thursday then back to its pre-pandemic level of £125,000 on 1 October.
The policy has been cited as a major factor in pushing up property prices which have also been boosted by households that have been able to save more money during the pandemic.
Even on a conservative estimate, on the basis of turbo-charged house prices first-time buyers are paying an extra £18,537 for their first home compared to this time last year.
In some regions outside London, the difference is, on average, even higher. First-time buyers in the northeast and West Midlands have to find an extra £20,000, with those in Yorkshire and the Humber, the northwest, and southwest amongst the hardest hit.
Ms Powell accused ministers of a failed approach to housing, highlighting that homeownership is down after a decade of Conservative government, and that ministers’ lack of focus on fundamentally addressing affordability is fuelling the housing crisis many face.
Ms Powell said: “First-time buyers have been further squeezed out of the housing market by the government’s failed approach, which has turbo-charged an already buoyant housing market that had pent up demand even before the stamp duty holiday was introduced.
“They’ve given a huge tax break to the housing sector without addressing the fundamental issues of affordability. As a result, the dream of homeownership is now even further out of reach for first time buyers who are now priced out of the market. Ten years of a Conservative Government with the wrong priorities, has failed to tackle the housing emergency.”
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