Stealth taxes intensify London first time buyer struggle

Fresh research reveals that a combination of government stealth taxes is significantly worsening the struggle for first-time buyers in London. According to Moneyfacts, the average home in the capital now accounts for an astonishing 14.7 times average earnings, after factoring in stamp duty, national insurance, and income tax. This burden is more than double that faced by first-time buyers in other regions of England, including the North West, North East, Yorkshire, the South East, and the South West.

The analysis highlights that the current first-time buyer stamp duty relief has not kept pace with escalating property prices, meaning most London homes now surpass the £500,000 threshold, resulting in an average tax burden of £16,350 upon purchasing a home. Additionally, freezes in taxes like the personal allowance and higher rate bands have disproportionately affected younger workers in the city, making it harder for them to save and borrow.

The cost of buying a typical London home now amounts to a whopping £70,000 in upfront cash, which equates to over a decade of saving for an average Londoner. This calculation underscores the need for more flexible borrowing rules and a surge in housing supply to assist aspiring first-time buyers in the city. Adam French, Head of Consumer Finance at Moneyfacts, emphasized that the increasing tax burden and high living costs are creating a significant barrier to homeownership for Londoners who aspire to own a home.