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End of stamp duty holiday encourages higher value property purchases in Scotland
First time buyers in Scotland purchased higher priced property in the first quarter of 2012 as a result of taking advantage of the stamp duty concession, the Council of Mortgage Lenders (CML) has said.
According to survey data, 38 per cent of first time buyers in Scotland purchased property valued between £125,000 and £250,000 in the run up to March - the highest proportion within this band since records began in 2005.
The 1 per cent stamp duty rate for first time buyers on properties valued between these two bands was reintroduced on 24 March following a two year exemption.
Chair of the CML for Scotland, Iain Malloch, said: "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."
The CML said that although the stamp duty holiday only related to first time buyers, it was likely to have had triggered a chain effect on other property transactions around the UK, and could have accounted for the largest increase in lending from February to March.
In the UK, 24,000 loans were taken out by first time buyers in March, an increase of 74 per cent from February, adding £3 billion to the mortgage market. First-time buyers accounted for 42 per cent of total house purchase loans in the UK - the highest proportion since 2001.
Elsewhere in the UK, first time buyers seized the largest share of Northern Ireland's mortgage market, with 60 per cent of house purchase loans taken out by this group.
Chair of the CML in Northern Ireland, Derek Wilson, commented that reduced property prices and lower deposit requirements were making it easier for first time buyers to get a foot on the property ladder in Northern Ireland.
However, both chairs of the CML for Northern Ireland and Scotland, and the director general for the UK, Paul Smee, remained cautious over future property and mortgage trends.
Paul Smee said: "We expected this significant increase in borrowing for March because of the stamp duty holiday. However, if lending follows the same pattern as after previous stamp duty concessions, we will likely see a drop in activity in the next few months. It will take some time before we can judge whether other initiatives such as the NewBuy scheme and the reinvigorated right to buy will compensate for this effect."