First-time buyers will welcome the recent announcement that Stamp Duty Land Tax (SDLT) is to be abolished on the purchase of their first property up to the value of £300,000, a move offering savings of up to £5,000. Chancellor Philip Hammond delivered the news as part of his Autumn Budget Statement on 22nd November with the measure taking immediate effect.
The move is part of a range of measures being introduced to tackle the recent decline in the UK housing market. If buyers don’t have to save the Stamp Duty they will be able to put down bigger deposits or buy more expensive houses. Some critics are suggesting however that rather than giving first time buyers a boost onto the property ladder the tax break could result in house prices being pushed up.
The First-Time Buyer Relief applies to individuals purchasing a residential property as a main residence in England, Wales and Northern Ireland. They must never have owned an interest in a property in the UK or anywhere else in the world previously, and this includes property which has been inherited.
The New Rates
For those who are eligible, property purchases up to £300,000 will be exempt while those between £300,000 and £500,000 will be subject to SDLT but the first £300,000 will still receive the exemption:
|Portion of Purchase Price||Current Rate||New Rate for first time buyers|
|Up to £125,000||0%||0%|
|£125,000 – £250,000||2%||0%|
|£250,000 – £300,000||5%||0%|
|£300,000 – £500,000||5%||5%|
A new Price Hurdle?
An interesting result of the new rules is the creation of a house price hurdle at the £500,000 point, as the exemption doesn’t apply for houses over this price.
This means that for first time buyers the Stamp Duty on a £500,000 house will be £9,999.95, but on a £510,000 house will be £15,499.98 as the whole price becomes chargeable. This mean an extra £10k house price gives an extra £5.5k of Stamp Duty, an effective 55% tax rate!
We can therefore expect some tough negotiating on asking prices which are just over £500k as the buyers try and push the price down to qualify for the exemption.
Get Reliable Conveyancing for your First Home
If you are buying your first home you will need an expert conveyancer to handle the legalities and guide you through the process. Backhouse Solicitors are here to make the process as straightforward and as stress free as possible.
We are accredited by the Law Society’s Conveyancing Quality Scheme meaning that you can rest assured your property transaction will be handled to the highest possible standards. For more information please call 01245 893400 or if you are just looking for conveyancing quote for your move, please click here for our Instant Quote page.
The Backhouse Solicitors Property Team
Tel: 01245 893400
Visit: 17 Duke Street, Chelmsford, CM1 1JU
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