The budget saw the Chancellor abolish Stamp Duty Land Tax (“SDLT”) for first time buyers buying a property with a purchase price up to £300,000.00 in England and Northern Ireland as well as Wales, up to 31 March 2018. In a further effort to entice first time buyers to step onto the current, somewhat slumped property ladder, first time buyers buying a property up to £500,000.00, will not pay SDLT on the first £300,000.00 of the purchase price.
The definition implies those who are buying a property for the first time; this is however incorrect.
A first time buyer is defined as:
“an individual or individuals who have never owned an interest in residential property in the UK or anywhere else in the world and who intends to occupy the property as their main residence.”
Unfortunately, this not only means those who haven’t actually bought a property before but also those who have inherited a property, been gifted a property or who are beneficiaries under a trust. None of these people are unable to benefit from the relief – some may argue the relief should be called first time owner’s relief, to correctly reflect the situation.
If you are buying jointly with another buyer/s, each of you must satisfy the definition of a first time buyer to benefit from the relief. If one of you has ever owned an interest in a property as set out earlier, then none of you are unable to claim the relief.
|Portion of purchase price||Current rates||Rates for first time buyers|
|Up to £125,0000||0%||0%|
|Over £125,000 and up to £250,000||2%||0%|
|Over £250,000 and up to £300,000||5%||0%|
|Over £300,000 and up to £500,000||5%||5%|
On an average property value of £208,000.00 you could save £1,660.00. However prospective first time buyers in London are likely to benefit more. If you’re buying a property between £300,000.00 and £500,000.00 you could stand to save around £5,000.00 according to Government figures.
The SDLT relief to first time buyers is enforceable from 22 November 2017.
Unfortunately if you have completed on your transaction before 22 November 2017, you will not benefit from the relief. However if you have completed on or after 22 November, you are likely to benefit from the relief and this should be claimed when submitting your SDLT return.
Unfortunately you don’t directly benefit from any of the changes to SDLT in yesterday’s budget. You are still liable to pay SDLT at the usual rates.
Sceptics and property experts are predicting the changes will give rise to a 0.3% increase in property prices, suggesting this will cancel out any savings you could stand to make. Is this supposed benefit then actually benefiting existing property owners in the long-run? Probably.
The jury is still out as to whether the changes will actually encourage prospective first time buyers to buy. However it is safe to say that this alone is unlikely to revolutionise the property market as there needs to be more affordable housing available or existing homeowners need to sell. If the SDLT changes don’t benefit them and house prices threatening to increase even more, they may be deterred from moving house. This defeats the object of increasing the number of first time buyers.
In conclusion, I think it is safe to say that these changes alone are unlikely to help first time buyers. Today’s changes are but one of the many hurdles that first time buyers face.
If you need advice about the new SDLT changes or are thinking of buying or selling your property, please contact me, Hershali Kanabar, on 020 3150 1919 or at email@example.com.