The Chancellor announced the Autumn 2017 Budget on Wednesday. One of the more popular proposals within the Budget has been welcomed by those attempting to climb onto the property ladder.
What was announced?
With immediate effect, stamp duty will be cut for first time buyers purchasing a property in England, Wales and Northern Ireland.
What is Stamp Duty?
Stamp Duty Land Tax (also known as SDLT or just Stamp Duty) is a type of tax payable on the purchase of land or property. The amount payable depends on the value and type of transaction. We looked in more detail at stamp duty and the various rates in this earlier article.
The new rules
So how exactly does this work and how can you make sure you benefit from the changes?
- There will be NO stamp duty payable by first time buyers who are purchasing a property for up to £300,000.
- If you are buying a house for between £300,000- £500,000, no stamp duty will be paid on the first £300,000. You will then have to pay SDLT at the normal rate on the second £200,000.
- If you are purchasing a house for over £500,000, you will not be entitled to any relief.
|Property or lease premium or transfer value||Standard stamp duty rate||Rate for first time buyers|
|Up to £125,000||0%||0%|
|Over £125,000 and up to £250,000||2%||0%|
|Over £250,000 and up to £300,000||5%||0%|
|Over £300,000 and up to £500,000||5%||5%|
This will apply to purchases which completed on or after 22 November 2017. To take advantage of this, all purchasers must be first time buyers. This means that they must have never owned an interest in a residential property in the UK or the rest of the world.
These changes will no doubt assist many younger people who are struggling to save enough to get onto the property ladder. It will save first time buyers up to £5,000 on stamp duty. It is estimated that around 80% of first time buyers will benefit from this change.
Help to buy schemes
Some people have predicted that the abolition of stamp duty for first time buyers will serve to increase house prices, although this remains to be seen. Others have criticised the changes on the basis that stamp duty is only a minor percentage of the cost of purchasing a first property, noting that financial assistance is needed elsewhere (such as deposits) for first time buyers.
Despite this criticism, the changes, particularly when used together with one of the help to buy schemes, could work to encourage more people to make the step into home owning.
If you are a first-time buyer who is already in the process of purchasing a property, you may need to complete some additional paperwork for your conveyancer or solicitor to claim the relief.
If you have any queries in relation to SDLT, our residential conveyancing or new build teams can help. Call us today on 0800 988 7756.