Stamp duty axed for most first-time buyers. How will this affect you…
The Chancellor has announced in his Budget today that first-time buyers will pay zero stamp duty on the first £300,000 on any home that costs up to £500,000 with immediate effect. This means that in a home worth less than £300,000, you’ll pay no stamp duty, while those spending up to £500,000 will only pay duty on £200,000 of the price.
The Chancellor said he wanted “to take action today to help young people who are saving to own a home”, addressing the challenge for first-time buyers of finding the “cash required up front”. Designed to boost home ownership, the HM Treasury estimates that raising the threshold to £300,000 will cut the tax for 95% of first-time buyers and abolish it altogether for 80% of them.
Mike Jones, Managing Director of Michael Jones Estate and Letting Agents said: “The stamp duty relief will be a welcome boost to those looking to take their first steps onto the property ladder. For many, stamp duty has stood as a barrier to homeownership as another cost to overcome but with this exemption those able to get a mortgage can potentially save thousands of pounds, making the path to owning a property just that little bit easier“.
What is stamp duty?
Stamp duty land tax is a lump-sum tax that anyone buying a property or land costing more than a set amount must pay upon completion of the property. The rate you pay will vary based on the price of the property.
How will the new system work for first-time buyers?
In England, Wales and Northern Ireland, the new stamp duty rates for first-time buyers buying properties costing up to £500,000 are as follows:
• Up to £300,000 purchase price: 0% stamp duty
• £300,000.01 to £500,000: 5% (on that portion of the purchase price)
If you are a first-time buyer purchasing a property costing more than £500,000, then you won’t benefit from any change and will be buying under the standard system, which applies to non-first time buyers too.
Who counts as a first-time buyer?
Anyone who has never owned a property before, whether bought or inherited. If you’re a first-time buyer jointly purchasing a property with a non-first time buyer, unfortunately, you won’t qualify for these new first-time buyer rates, as you both need to be first-time buyers.
When does this come into effect?
It’s already in effect, as of 00.01am on 22nd November 2017. Stamp duty is paid when you complete the purchase of the property, if you’ve already exchanged prior to 22nd November 2017 but not completed, you’ll qualify under the new first-time buyer stamp duty system.
If you are a first-time buyer and have any questions about this latest news and how it could affect you or would like further advice on buying a property, speak to our team of experts today.
Content accurate at time of publishing.