First-time buyers across the UK are celebrating after the Government brought an immediate end to Stamp Duty Land Tax (SDLT) on first home purchases on properties worth up to £300,000 – as well as savings on homes worth up to £500,000.
With property markets across the UK stalling and with fewer first-time buyers purchasing homes, the Chancellor Philip Hammond took action in his Autumn Budget to give purchasers their first step on to the property ladder.
Under the previous SDLT regime, all first-time buyers paid no tax for homes worth up to £125,000, but would pay a two per cent charge on the next portion of the property value from £125,001 to £250,000 and five per cent on the portion of additional value from £250,001 to £925,000, with further increases for more expensive homes.
However, the new rules mean that first-time buyers will pay 0 per cent on the first £300,000 and a smaller percentage on the home’s value between £300,001 and £500,000.
According to the Government, the new move will help about 95 per cent of first-time buyers, while 80 per cent of first-time buyers will pay no stamp duty at all. This could offer first-time buyers with a saving of up to £5,000.
However, since the announcement the Office for Budget Responsibility has raised concerns that the move could lead to further price increases, with sellers using the exemption to dig their heels in against first-time buyers and raise prices.
The move is only open to individuals who have never owned a residential property, or an interest in a home, in the UK or anywhere else in the world.
The measure also makes it clear that the home must be occupied by the buyer as their main home, while parents who help to fund the purchase of a property for their children must be careful not be named as one of the buyers, as it will block the SDLT exemption if the parent has previously owned a home.