Around 60,000 first-time buyers have benefited from the Stamp Duty relief announced last year, the Chancellor claims, but it is costing more than the Government expected.

There have also been calls for more information about these first-time buyers.

Philip Hammond used his first Spring Statement speech yesterday to reveal the number of first-time buyers who have used the exemption announced in last November’s Autumn Statement.
The relief lets first-time buyers purchasing homes worth under £500,000 pay no Stamp Duty on the first £300,000.

But research from the Officer for Budget Responsibility (OBR), released at the same time as the speech yesterday, revealed that higher property prices meant the relief is costing more than expected.

The OBR said the measure was due to cost £125m in the remaining months of the financial year 2017-18 and £560m in 2018-19, rising steadily to £670m in 2022-23.

It added: “At the time of closing our current forecast, HMRC had administrative data covering the first 71 days that the relief has been in effect.

“This suggests that so far it has cost more than originally expected – the number of sales benefiting has been broadly as expected, but their average price has been slightly higher than assumed. While this early evidence should be treated with caution, there is no clear reason why the higher average prices should be treated as a temporary phenomenon.

“We have therefore reflected them in our forecast for future years, lowering Stamp Duty receipts by around £10m a year from 2018-19 onwards.

“This suggests the annual cost of the relief could be around 15% to 20% higher than expected. But further revisions to the cost of this relief can be expected as more information becomes available, including HMRC’s first official statistics on the relief on April 26.”

Commenting on the OBR’s revelations, Nimesh Shah, partner at accounting, tax and advisory practice Blick Rothenberg, said: “Based on the Chancellor’s claim, the first-time buyer relief has cost the Treasury up to £300m in just under four months since its introduction. At the current run-rate, it will cost the Treasury close to £1bn in the first year.

“The claim by the Chancellor that 60,000 first time buyers have already benefited suggests that the Government’s original figures were significantly under-estimated.”