Budget for 2017 cuts Stamp Duty for first-time buyers

UPDATE - Due to the way in which the property market developed a pace, following the publication of this article, as a result of the Government's announcement regarding the Stamp Duty holiday, Holmes & Hills' No Sale, No Fee Promise will not be being applied to conveyancing services until further notice. Where a client was quoted with the No Sale, No Fee Promise applied and this is referenced in the terms of the quotation, this will be honoured.

Following announcements in this year’s Government Budget review, Stamp Duty Land Tax has been abolished for first-time buyers for property purchases up to the value of £300,000. For first-time buyers purchasing properties over £300,000 and under £500,000, normal rate Stamp Duty (5%) will be paid on the additional amount over £300,000. Property purchases over the value of £500,000 are not eligible and normal rate stamp duty will be paid in exactly the same way as it would if a home had been brought before.

The table below demonstrates the new rate of stamp duty that will be paid on first-time purchases:

Purchase Price
Stamp Duty Paid
Under £300,000
£0
£300,001 - £500,000
£0 on the amount up to £300,000, 5% on the amount over £300,000 and below £500,000
Over £500,000 (but under £925,000)
0% of the first £125,000

2% on £125,001-£250,000

5% on £250,001-£925,000
 

It is anticipated that 95% of first-time buyers who pay stamp duty will benefit from these latest changes and will mean that 80% of those buying their first home will no longer pay any stamp duty.

As well as the changes to stamp duty for first-time buyers, the Budget also allocated wider support over the coming five years in order to help build 300,000 net new homes a year in order to further support the property market.

Example of stamp duty to be paid on a first-time purchase of a property brought at £375,000

£0 stamp duty paid on the first £300,000

5% stamp duty paid on the additional £75,000

Total stamp duty to be paid = £3,750

Saving compared to previous stamp duty rules = £5,000

Those not eligible to benefit:

Those who have already purchased their first home or who meet any of the below criteria are not eligible to benefit from the changes in stamp duty rates and will therefore continue to pay the same stamp duty as they would have prior to the latest Budget announcements:

• Bought a property (either freehold, leasehold or a lease for 21 years or more, including mix use properties)
• Have inherited a property
• Are a beneficiary of a trust that owns a property

If you are a first-time buyer purchasing a property with someone who is not a first-time buyer, you will not benefit from the change in stamp duty regulations.

When do the changes come into force?

The changes came into effect immediately, as at 12:01 on 22nd November 2017.

What if I have recently completed on my first property purchase?

For those first-time buyers that have recently completed their purchase and paid stamp duty according to the regulations that previously applied, there is no rebate available.

I already began the process of buying my first property, but haven't completed yet, where do I stand?

Those first-time buyers that are currently going through the process of purchasing their property, but have not yet completed, will benefit from the stamp duty change.

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