On Wednesday 22nd November 2017, the UK government held the Budget 2017 where the government announced a discounted rate of stamp duty land tax (SDLT) for first-time buyers.
How is Stamp Duty Land Tax Changing?
The reform will allow complete relief from SDLT for those first-time buyers purchasing properties for up to and including £300,000; though buyers purchasing for up to and including £500,000 will benefit from the relief also. These changes are effective from the day of the 2017 Budget (22nd November).
The new rules are as follows:
First-time buyer, purchasing for £300,000 or less - SDLT is waivered entirely.
First-time buyer, purchasing for £500,000 or less - SDLT is payable at 5% on the difference between the property price and the £300,000 limit. So, for example, a purchaser buying for £400,000 will pay £5,000 in SDLT.
First-time buyers purchasing for over £500,000 - SDLT is payable at the standard, existing rates, on the whole of the property value. So, for example, a purchaser buying for £600,000 will pay £20,000 in SDLT (2% of the amount between £125,000-£250,000 and 5% of the amount above the £250,000).
Existing homeowners will pay the existing rates of SDLT, the rate of which will depend on whether or not they are replacing their main residence, as per the current rules.
Read more: FAQ Series: What is the Stamp Duty Threshold?
Who is a First-Time Buyer?
Please note, there are strict guidelines to what constitutes a first-time buyer and therefore who is now exempt from SDLT.
The government define first-time buyers as “someone who has never owned freehold or leasehold interest in a dwelling before and who is purchasing their only or main residence.” All residential property “anywhere in the world is counted when determining whether someone is a first-time buyer.” For transactions involving more than one purchaser, “all purchasers would need to be first-time buyers.”
Therefore, if you are a first-time buyer purchasing with a partner who is not, you will have to pay SDLT. The same goes if you have at any point inherited property that you have never lived in, even if you are no longer a property owner.
How Can Howells Help?
If you plan on purchasing your first home in the near future, you’ll need the advice of a legal professional. Call our experienced residential conveyancing solicitors on 02920 404020 or email us at info@howellslegal.com to speak to one of our legal experts today.
Alternatively, read the full Policy Paper here.
