The Autumn 2017 Budget has certainly affected all of us in some way or another. One of the most talked about changes was the stamp duty relief for first time buyers. The Chancellor Phillip Hammond abolished Stamp Duty Land Tax (SDLT) for first time buyers on the first £300,000 on any property that costs up to £500,000. Therefore, if a property costs less than £300,000, a first time buyer would not need to pay any SDLT.
What is Stamp Duty Land Tax?
SDLT is a tax payable when you buy a property or land over a certain price in England, Wales and Northern Ireland. The current SDLT threshold is £125,000 for residential properties and £150,000 for non-residential land and properties.
However, first time buyers qualify for a relief and pay less or no tax if:
- The property purchase completed on or after 22 November 2017;
- The purchase price is £500,000 or less;
- The buyer or anyone else they’re buying with, are first-time buyers.
What is a ‘First Time Buyer’ for the purposes of SDLT?
A first time buyer is someone who has never owned a property anywhere in the world. You will not be considered a first time buyer if you are buying your first property to let, as opposed to a home to live in. Unfortunately, those who have inherited property will not be considered a first time buyer. The same rule applies even if the inherited property was sold straightaway. If you are a first time buyer but you are buying jointly with somebody else, sadly you will not benefit from the first time buyer SDLT rates.
Will the new exemption for first time buyers benefit you?
The new rules surrounding SDLT will certainly be appealing to first time buyers and will most definitely benefit a lot of people. To what extent however, will very much depend on where they are purchasing property. For example if first time buyers are hoping to buy their first property in and around London, it is unlikely that they will find many properties under £300,000, compared to buying in Manchester, Liverpool, Bristol, Coventry etc. Nevertheless, even where a property costs more than £300,000 but less than £500,000, firs time buyers can still have the benefit of paying no SDLT on the first £300,000.
Theresa May has said that the changes have had an "immediate impact", and there are predictions that thousands of people are already making savings and more than a million first-time buyers are set to benefit over the next five years. However, a recent report in City A.M. suggests that the stamp duty cut for first-time buyers is having minimal impact on market. Moreover, there is speculation that any reduction in SDLT has been cancelled out by sharp increases to house prices, thereby resulting in first-time buyers paying more overall despite making some saving on SDLT.
Whether you are a first time buyer or already on the property ladder, our experienced team of solicitors can assist you with any aspect of residential and commercial property. Please call us on 0207 226 0570 or email firstname.lastname@example.org if you require assistance with your property sale or purchase.