First-time buyers faced with stamp-duty woes

First-time buyers are still being held back by stamp duty land tax, new figures show.

For the last two years in a row the chancellor has increased the threshold that stamp duty is paid at in an attempt to make life easier for new homeowners.

But despite this, figures out today from the Council of Mortgage Lenders (CML) show that half of first-time buyers still pay the tax.

"With half of [first-time buyers] having to pay stamp duty it is clear that tax continues to add to their affordability problems," said Michael Coogan, director general of the CML.

"Reform of stamp duty is long overdue. If it had been uprated in line with house price inflation since 1997 the threshold would stand at £145,000, helping many more first-time buyers onto the property ladder and into their own homes."

In the last two years the chancellor has raised the lower threshold from £60,000 to £125,000.

But despite this, and with the average price of a home in England and Wales now over £190,000 (full story) some 69 per cent of people buying homes in March paid the tax.

The CML's regulated mortgage survey shows that in March 17,200 first-time buyers (50 per cent of the market) paid stamp duty and 44,700 people moving to a new home (80 per cent) also paid the tax.

The CML's data also shows that fixed-rate mortgages made up 69 per cent of home loans taken out in March - the lowest level since August last year.

However, after nine months of interest rate stability and with rumours that rates could rise again soon, cheap fixed-rate mortgage deals are becoming rarer and experts are advising consumers to move to tracker or discount-rate mortgages.

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