Newcastle has responded to the Autumn Budget’s stamp duty cut by offering free legals for first-time buyers.
The building society has launched a two-year fixed rate deal at 4.25 per cent and a five-year fixed rate at 4.6 per cent, both of which are available up to 95 per cent loan-to-value and have no reservation or completion fees.
Both products include all standard legal costs, including Land Registry fees, Land Registry priority search, bankruptcy searches, property searches and VAT.
Newcastle will also appoint an approved solicitor on the borrower’s behalf to arrange completion of the purchase.
The move to support first-time buyers follows chancellor Philip Hammond’s decision to axe stamp duty for first-time buyer purchases of less than £300,000, which was announced in Wednesday’s (22 November) Autumn Budget.
He claimed the move would cut stamp duty for 95 per cent of first-time buyers and abolish it altogether for 80 per cent of first-time buyers.
It will lead to savings of up to £5,000 in London and £3,839 in the south east, where the average first-time buyer house prices are £409,795 and £276,773 respectively.
But brokers have repeatedly raised concerns with free legals, claiming the volume of cases being dealt with by conveyancers can cause significant delays and this may lead to clients paying extra to remain on a lender’s standard variable rate or missing out on a forward purchase.
Steve Carruthers, head of mortgage distribution at Newcastle Intermediaries, said: “We’re fully committed to helping first-time buyers onto the property ladder and welcome the budget announcement this week, which will hopefully help even more people own their first home.
“These products, with the addition of inclusive legal fees, could be an ideal choice for first-time buyers hoping to maximise their savings for their deposit by assisting with the upfront costs of buying a property.”
Paul Dorward, mortgage adviser at Sheffield-based Pad Financial, said: “That is probably a good move, and it will be interesting to see how some of the bigger lenders react.
“The big struggle for first-time buyers is the deposit, so if you can free up some money from fees to go to your deposit, it can make your deposit bigger or get you to your target quicker.”
Mr Dorward acknowledged there had been problems with free legals and said firms had to cut costs somewhere to be able to offer the service.
But he added: “With any housing transaction, it is all about communication: so long as you are in touch with the solicitor, the estate agent and the vendor, and everyone knows what is going on and talking to each other, you should be OK.”
simon.allin@ft.com
