Martin Lewis criticises Treasury's ‘irresponsible’ messaging over first-time buyer savings
Martin Lewis has criticised “irresponsible” government messaging over how much first-time home buyers could save from stamp duty cuts, following the mini-budget announcements.
Speaking on ITV's Good Morning Britain, which he co-hosted on Monday, the money saving expert said the messaging from the Treasury could give buyers "false hope" during the cost-of-living crisis.
Treasury, in a now deleted tweet, said: “Thanks to the Growth Plan, a typical first-time buyer in London moving into a representative terraced house will save £11,250 on stamp duty & £1,050 on the household’s energy bills – and if they earn £30,000 almost an additional £400 on tax.
"This is around £12,700 in total.”
The post attracted backlash, as many Twitter users pointed out someone earning £30,000 would be unlikely to be able to secure - or service - a mortgage to cover the cost of a London terraced home, unless they had a deposit running in the hundreds-of-thousands of pounds.
Mr Lewis asked for the "nonsense" stamp duty claim to be deleted on Twitter, as he explained why the post's claims did not reflect property market conditions.
Mr Lewis, interviewing Treasury minister Chris Philp on the programme, said: “Now, on my calculations, to save £11,250 on stamp duty you have to be buying a house as a first-time buyer of £500,000 or more.
“The cheapest fixed-rate mortgage on a £500,000 property with a 10% deposit leaves you with payments of £2,400 a month, which is £28,000 a year.
“But your example is for somebody who earns £30,000 a year. Clearly, they would not get that mortgage. And clearly on £30,000 a year before tax you cannot pay a mortgage of £28,000 a year.
“This seems fundamentally irresponsible for the Treasury to be putting out this kind of statement in the middle of a cost-of-living crisis.”
The consumer expert told Mr Philp: “I’m guessing you don’t know about it. But what do you think of your own department putting out these types of messages?”
Martin Lewis interviews Treasury minister Chris Philp
Mr Philp responded: “I imagine, I’m just sort of speculating, when they used the £30,000 to work out the tax saving, they were doing that to illustrate the income tax saving of someone on approximately median earnings.
“You are right to point out that someone on that particular level of earnings would be unlikely to be able to get a mortgage to fund a £500,000 house, unless, of course, they were doing so with a partner, but I suspect that’s why they did it."
Mr Lewis replied: “It doesn’t mention the partner’s income and the headline includes all the savings added in one…”
He later asked Mr Philp: “Can I ask you to look at those messages? These are big, bold messages… to have them taken offline in the middle of a cost-of-living crisis, where they give people false hope?”
He asked for Mr Philp to personally look into the "irresponsible" message posted on social media by his team.
Mr Philp responded: “You’re right to point out the anomaly between the salary and the house value and I’d be happy to take a look at it.”
Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know.
The choice of mortgage products on the market fell sharply following the mini-budget, as many lenders pulled deals off the shelves and re-priced their products upwards.
For some home-buyers, higher mortgage rates could outweigh any stamp duty savings they may stand to make.
There were 2,262 residential mortgage products available on Monday October 3, down from 3,961 on the day of the mini-budget, according to Moneyfacts.co.uk.