In June’s general election only 21% of 18 to 29-year olds voted Conservative, compared to 64% supporting Labour. It’s no surprise that Hammond’s Wednesday Budget attempted to appeal to a younger audience, abolishing the stamp duty for first-time buyers. But how will the Budget actually affect us?
Whilst the new freeze on alcohol duty might make a bottle of wine for us 6p cheaper (unlikely knowing the excessive prices of Lenton’s Sainsbury’s), there are more pressing issues to come out of the budget that may impact our lives over the following years. Entangled within Hammond’s surprisingly not awful jokes (has Spreadsheet Phil had a personality transfer?) he provided potential hope for young voters by announcing the immediate abolishment of the stamp duty for first-time buyers buying a home of up to £300,000. Or for a home costing up to £500,000 no stamp duty will be paid on the first £300,000. What effect will this have?
“At least the government is acknowledging that something needs to be done to help first-time buyers”
According to Hammond 95% of first-time buyers would see a cut in stamp duty, with 80% paying none at all. With the prospects of getting on the property ladder looking increasingly terrifying in recent years (almost as terrifying as Hammond’s personality transformation), this sounds like great news for our generation.
However, stall your search on Rightmove – don’t get carried away with this politician jargon. The change is likely to cause an increased demand for homes by first-time buyers and this will result in increased house prices, predicted as a 0.3% rise by the Office for Budget Responsibility (OBR). Houses will be more expensive for new buyers, but existing homeowners will benefit.
How this cut will affect first-time buyers completely depends on where you live. In the North of England average house prices are only just above the Stamp Duty threshold of £125,000, so the average duty charge is just £11.82 – the duty cut here will have little effect in benefitting first-time buyers. Whereas further south, and the more house prices increase the more likely Hammond’s announcement will benefit the young generation.
“The Tories are clearly making attempts to cling onto (and drastically increase) their support among under-30s”
Abolishing the stamp duty may not be perfect, but at least it shows acknowledgement by the government that something needs to be done to help first-time buyers have at least a shot at getting on the property ladder. It’s a start. Even if it’s a possibly slightly counterproductive, low impact one.
A perhaps more promising outcome of the budget for students is the end of student loan overpayments. In 2015-16 86,000 people overpaid on their student loan, with graduates overpaying on average almost £600. At the moment if you finish paying off your loan in the middle of the financial year you’ll continue to pay until the end of it, and you later claim it back. You’re effectively giving the government £600 only for them to return it to you six months later. It’s a useless, and annoying, transaction. This announcement won’t save people money, but saving people time and hassle will prove popular.
The Tories are clearly making attempts to cling onto (and drastically increase) their support among under-30s. These attempts alone will almost certainly not be sufficient. Both policies are beneficial for young voters, but are unlikely to have a huge effect (an £11.82 stamp duty saving is hardly going to be the most important reason for voting for a party). However it is a move in the right direction. Rome wasn’t built in a day, and neither will the Tories’ popularity with the young demographic be. Hammond’s ‘funny’ personality took around a year to appear; the Tories will be lucky to have as quick a turn around with young voters.
Image courtesy of Foreign and Commonwealth Office on Flickr