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End of stamp duty holiday led to higher value purchases by first-time buyers in Scotland
2 years ago at 13:01

 

Scottish first-time buyers bought higher-priced property than usual in the first quarter of 2012, taking advantage of the stamp duty concession, according to new figures released today by the Council of Mortgage Lenders in Scotland.

 

38% of first-time buyers in Scotland bought property valued between £125,000 and £250,000, the bands exempt from stamp duty during the concession. This is the highest proportion since records began in 2005. Due to lower house prices in Scotland, around 35% of first-time buyers usually buy property in these bands compared to 50% in the UK as a whole. Properties under £125,000 were still the most popular option in Scotland in the first quarter but, at 58% of first-time buyers buying within this band, this is the lowest since records began.

 

 

First-time buyers number of loans and average LTV, Scotland

Source: CML regulated mortgage survey

 

 

There were 4,000 loans, worth £380 million, taken out by first-time buyers in Scotland in the first quarter. Despite the stimulus provided by the end of the stamp duty concession, this was a 9% fall in the number of loans and a 5% fall in the value compared to the previous quarter, but a rise of 21% by number and 31% by value compared to the first quarter of 2011. First-time buyers accounted for 42% of the house purchase loans in Scotland, the highest since 2001 and the same proportion in the UK as a whole.

 

Scottish first-time buyers typically borrowed 80% of their property’s value in the first quarter of the year, the same as the UK overall. The proportion of income spent on mortgage interest payments by first-time buyers increased to 11.4% in the first quarter from 11% in the previous quarter but was still lower than the proportion paid by first-time buyers across the UK (12.7%).

 

Lending to home movers followed a similar pattern to first-time buyers. The 5,500 loans taken out, worth £720 million, was a fall of 24% (25% by value) from the last quarter, but a rise of 8% (11% by value) compared to the first quarter of 2011.

 

Number of loans for house purchase year-on-year % change UK v Scotland

Source: CML regulated mortgage survey

 

 

Overall, Scotland experienced a fall in lending for house purchase, as in the UK, in the first quarter of 2012. 9,500 loans were taken out, worth £1.1 billion, down from 11,600, worth £1.4 billion, in the last three months of 2011, but up from 8,400, worth £930 million, in the three months to March 2011. 

 

Number of loans advanced for remortgage year-on-year % change UK v Scotland

Source: CML regulated mortgage survey

 

 

Remortgage lending also dropped in the first quarter in Scotland and UK-wide. There were 7,800 loans, worth £750 million, down from 9,000, worth £880 million, the previous quarter and 8,900, worth £850 million, in the first quarter of 2011.

 

Iain Malloch, chair of CML Scotland, commented:

"Despite the fall in lending in Scotland in the first quarter of the year, the end of the stamp duty concession clearly had an effect on the market, mainly with the increase in the proportion of higher priced properties bought by first-time buyers during this period. However, if Scotland follows the trend expected across the UK, there is likely to be a further drop in activity over the coming months.

 

"The CML in Scotland looks forward to working with the Scottish government and other stakeholders throughout the rest of 2012 to ensure the housing market is open for business across all tenures."

Source: Council of Mortgage Lenders (CML)

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