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| THURSDAY 24TH FEBUARY 2005 |
 MORE
UK FIRST TIME BUYERS SET TO PAY STAMP DUTY
Ninety per cent of first-time buyers are likely to pay stamp
duty on their homes by 2008, according to Alliance & Leicester Mortgages.
The bank forecasts that nine out of ten (90%) first-time buyers will have
to pay the tax within just three years based on current trends, with this
hitting 95% by 2011, making the first step onto the property ladder more
and more difficult.
Recent research conducted by Alliance & Leicester revealed that
stamp duty is a financial burden for the first-time buyer. In fact, one
in four (25%) first time buyers who bought a property in the last 12
months, found that the cost of stamp duty was a major obstacle to getting
onto the property ladder.
The nil-rate threshold of £60,000 has not been raised since 1993
when the average first time buyer house price was £44,000. Today
the average price is £145,408 and the percentage of first time
buyers affected by stamp duty has trebled in the last seven years. Whereas
in 1997 just over 25% of first-time buyers paid stamp duty, 75% of first-time
buyers pay stamp duty today.
To help combat stamp duty woes, Alliance & Leicester is launching
a new mortgage product primarily aimed at the first-time buyer and designed
to help them cover the cost of stamp duty.
The buyer will receive £1,500 cashback for loans between £25,000
- £100,000 and £2,500 cashback for loans between £100,001
- £250,000, with the cashback linked to the size of the loan.
Other benefits of the 'first step' Mortgage include:
 Fixed
rate of 5.99% for 3 years
No product fee
Free valuation (refunded upon completion)
Early repayment charge of 3% of the outstanding balance if
redeemed before 31 May 2008.
Stephen Leonard, Director of Mortgages, Savings & Investment Products
at Alliance & Leicester, said: "Alliance & Leicester’s
research findings show that the cost of stamp duty is a real issue for
first-time buyers."
"More needs to be done to address the concerns and burdens of first-time
buyers. For this reason, I have written to the Chancellor, Gordon Brown,
to urge him to consider scrapping the tax for first time buyers. Stamp
duty was never intended to be a prohibitive tax and with the first-time
buyer market activity at a 20 year low, it seems this group of people
could do with a helping hand."
"The new mortgage product from Alliance & Leicester called
the First Step Mortgage will go some way to help first-time buyers with
the cost of stamp duty and should appeal to those who also want a competitive rate."
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