Housing associations have approached government to seek changes to the stamp duty cut after warnings that it currently excludes many shared ownership buyers.
The government axed Stamp Duty Land Tax for first-time buyers purchasing properties of up to £300,000 in the headline move of the Autumn Budget.
And today prime minister Theresa May boasted that more than 16,000 buyers have saved money due to the cut since it was introduced in November.
But many shared ownership buyers – particularly in London – will miss out on the savings because it is calculated according to the full value of the property.
For example, a buyer purchasing half of a £500,000 home in the capital will still pay around £2,500 in stamp duty despite purchasing only £250,000 of equity.
It is understood housing providers have approached the Homes and Communities Agency (HCA) and government to discuss alterations to the scheme and are hopeful of opening a dialogue.
Amy Nettleton, assistant development director at Aster Group and chair of the National Housing Group, said: “The end of Stamp Duty Land Tax on certain homes is a relief for many first-time buyers on the open market. For years this has been consistently highlighted as a blocker for those trying to get their foot on the ladder.
“The move gives thousands of pounds worth of relief for each homebuyer and it was one of many signs in the Budget that the government recognises the flaws in the market. However, failing to extend this measure to shared ownership could seriously impede the work going on to champion these homes. This is something the entire industry needs to be concerned about.
“For us, the key thing that shared ownership provides is another choice – important in a market where so many are stuck and unable to find the right solution for them. As a flexible option, it can cater to a range of different circumstances and could address the core affordability issue in many areas. But without the same tax break as open market homes, shared ownership will continue to be viewed by some as a ‘last resort’ rather than a viable option.”
Currently, shared ownership purchasers can chose to pay stamp duty on either the full market value of their new home or just the share they are purchasing.
But the cut announced in the Autumn Budget only applies to buyers using the full market valuation route.
This would allow buyers purchasing a home with a total value of less than £300,000 to benefit from the cut. However, when the full property exceeds £300,000 stamp duty will be collected – even if it is calculated by the value of the share.
Shared ownership is marketed particularly at buyers who would struggle to raise the initial cash for homeownership – such as the deposit and stamp duty costs.