Stamp Duty for First Time Buyers
Are you a first-time buyer? It is likely that you will benefit from the Stamp Duty Land Tax (SDLT) relief granted to first time buyers in the latest budget. This is a well welcomed relief for first-time buyers trying to get onto the property ladder.
First time buyers paying less then £300,000 for a residential property will pay no SDLT. First time buyers paying between £300,000 – £500,000 will just pay stamp duty on 5% of the purchase price over £300,000.
The relief is part of the Government’s commitment to increase the number of home owners in the UK, along with the many affordable schemes that are available. The Government predicts that at least 80% of first time buyers will benefit from the relief.
In order to benefit from the relief, there are a small number of provisions that must be met: –
-There must be a purchase of a single dwelling
-The purchase price must not be more than £500,000
-Each and every buyer must be an individual
-Each and every buyer must intend to use the home as their main residence
-Each and every buyer must qualify as a first-time buyer
To qualify as a first-time buyer, you must not have previously acquired a major interest in a dwelling situated anywhere in the world (not just the UK). This does include any properties which are inherited or gifted. However, relief is not denied if a buyer owns or has owned a non-residential property, as long as it did not include a dwelling.
Shared Ownership
If you are buying a shared ownership property and wonder how SDLT applies, Charles French & Co’s Affordable Housing Department can answer queries in this regard.
A buyer of a shared ownership property has two options with regard to SDLT:
-The buyer can pay SDLT on the value of the share they are purchasing. If the buyer looks to purchase more shares in the future (often known as ‘staircasing’), SDLT will be payable when the buyer’s share in the property goes over 80%.. This is normally the favoured position.
-The buyer can opt to pay SDLT on the full market value of the property and therefore will not have to pay any further SDLT on the purchase of any shares in the future. In this scenario, the buyer may claim first time buyers relief.
This therefore puts buyers of shared ownership properties who are looking to purchase and potentially own 100% of the home in a more favourable position. The Government’s SDLT regime is becoming increasingly complex and your potential SDLT liability requires careful consideration at an early stage.
If you require advice, please do not hesitate to contact one of our experienced Conveyancing team by phone or email.
