In the November 2017 Budget, Chancellor Philip Hammond announced an immediate reduction in Stamp Duty Land Tax (SDLT) that will benefit the vast majority of first time buyers in England, Wales and Northern Ireland and mean 80% of first timers will pay no stamp duty at all.
The reduction applies to properties valued up to £500,000, with no stamp duty to pay for the first £300,000 of property value, and a charge of 5% on anything above that.
Properties valued more than £500,000 are not affected by this: the standard stamp duty rates will still apply for first time buyers.
So the new rate structure looks like this:
|£0 - £300,000
|£300,001 - £500,000
Compared to the previous structure this will cut up to £5,000 from the cost of buying a new home (the existing rate for a £300,000 property).
To illustrate, here’s the savings that would apply for a first time buyer at various property values
Treasury figures say the average saving will be £1,660 with up to 95% of first time buyers benefitting.
The change came into effect immediately meaning purchases completing on or after 22nd November will benefit.
There are some important conditions in the small print though:
The Treasury defines a first time buyer as someone who has never owned residential property anywhere in the world, so this would exclude:
- Someone who previously owned their own home but doesn’t at the moment
- Someone who is a landlord but has never owned their own home
- Someone who has owned property overseas but not in the UK
For joint applications, both parties must be first time buyers. If either has owned property before, the standard SDLT rates will apply.
Scotland has its own land tax (Land & Building Transaction Tax) which is set independently by the Scottish Parliament, so Scottish first time buyers are not affected.
Wales will also get its own tax structure from April 2018, so from that point the Welsh Assembly will need to decide whether to maintain the first time buyer exemption