On the 31st December this year, the current stamp duty holiday is due to finish and many experts are concerned about what effect this will have on first time buyers applying for loans and entering the housing market, as well as the knock on effects on the rest of the housing and home owner loan markets.

Estate agents and loan companies have already seen a decline in the percentage of first time buyers during November and December, following a particularly high proportion of this sector applying for home owner loans in previous months, in order to get onto the housing market and avoid the necessity of paying stamp duty on their purchase.

Despite calls to extend the deadline, or reform stamp duty altogether, from 1st January next year the threshold for stamp duty will revert to its previous level of £125,000, from £175,000, which means that many first time buyers will face an additional bill of £1,750 in addition to all the other costs of buying a house and obtaining a loan.

In response to this, the Yorkshire Building Society (YBS) has increased the cash back deal it currently offers on all its first time buyer loan products, from £500 to 1 per cent of the total loan amount, in an attempt to help compensate for the increased cost of stamp duty. The loans also offer a free valuation and free legal fees and a maximum loan to value of 85 per cent.

Iain Cornish of YBS said “Buying your first home is a very expensive business. We have therefore designed these new mortgages to take some of the financial pressure off first time buyers. There are no fees to pay when they take out the mortgage and the cash back will help cover the cost of the stamp duty, which will be one of the first bills to land on the new door mat.”