Estate agency giant Countrywide has attributed a 10% annual spike in first-time buyer registrations in London to the Stamp Duty exemption.
Chancellor Philip Hammond used his Budget in November to announce the end of Stamp Duty for first-time buyers on purchases of up to £300,000, and on the first £300,000 on properties worth up to £500,000.
The Prime Minister last week claimed more than 16,000 first-time buyers have already benefited from this.
EYE was naturally sceptical about the data as it was not clear whether they were exchanges or completions and how so many sales could have been completed between the end of November and the start of January.
But figures provided to EYE by Countrywide suggest that there has at least been more interest shown from first-time buyers in London.
The firm said the number of first-time buyers walking into a branch in London rose 10% year-on-year in December, the largest annual increase since 2013. Outside the capital, however, the number of first-time buyers registering remains down on last year.
David Fell, research analyst for Countrywide, told EYE: “The increase looks to be an early sign of first-time buyers reaching to the cut in Stamp Duty. However, it’ll take a while for this to feed through into sales and then completions.
“This was very much a December spike – the number of first-time buyers registering last November was unchanged on 2016.”
However, agents are also reporting a downside to the changes, with some vendors being forced to cut asking prices below the £500,000 threshold.
Of the sales agreed by London agent James Pendleton since the Budget, ten deals have seen offers agreed under £500,000 where the asking price was, on average, £25,000 over the threshold.
Ewen Bunting, head of sales at James Pendleton, told EYE: “The Government’s exemption is playing havoc with the sale prices of homes just over £500,000 as first-time buyers restrict their search to those properties sporting a chunky Stamp Duty tax break.
“It’s clear what is happening when we look at the sale prices. Houses valued and marketed at between £520,000 and £540,000 have seen vendors forced to move with the market and accept offers at prices like £499,950 and £499,999, and one was £500,000 on the nose.
“We’ve seen sales agreed on ten properties at prices that were, on average, £25,000 below what they were being marketed at before the Chancellor got to his feet and we’re talking here about first-time buyers who are not typically cash rich. It is the government’s policy that is now creating a concrete ceiling at this level that the vast majority of first-time buyers will not step over.
“What this means is that the Chancellor’s exemption has forced ten of our vendors to sacrifice £250,000 in only the first month and half. This change will be costing home owners tens of millions of pounds across the country and we can see it’s having a particularly severe impact in London where many more properties straddle this boundary.”