Stamp duty is now abolished for first-time buyers purchasing properties worth up to £300,000, with an additional axing of the charge on the first £300,000 of a purchase price for properties worth up to £500,000 in London. The move immediately cuts the tax bill for 95% of first-time buyers in the UK and abolishes it altogether for 80% outside the capital. We discuss the results of this headline change, the savings to expect and what to do next.
What does the stamp duty change actually mean?
The stamp duty scrap was arguably the biggest giveaway in the entire budget, and one of the most tangible pieces of news for first-time buyers looking to get on to the housing ladder.
Previously, first-time buyers paid stamp duty on property or land purchases up to £125,000. Now that charge will be discarded entirely for every region in England outside of London, Wales and Northern Ireland. The change will not affect Scotland, which has its own independent land tax system.
House hunters faced a variety of stamp duty prices, depending on price and type of property before the budget. All that will now be simplified down to a straight-cut threshold, to the relief of buyers navigating the UK property system.
Note: The changes apply to first-time buyers only. Buy-to-let and second home stamp duty fees still apply.
How it works
The definition of a first-time buyer remains the same. If you have never owned, or part owned, a freehold or leasehold property anywhere in the world, then congratulations, you’re eligible!
The process is pretty simple. First-time buyers (or their solicitors who ordinarily manages stamp duty returns) will need to enter a code on their stamp duty returns to indicate that they are indeed first-time buyers. Stamp duty will need to be calculated based on new rates.
How much will you save?
What level of savings can first-time buyers expect compared to those who bought before 21st November? The table sets out how much you will save as a first-time buyer:
Source: HM Treasury
Now is the time to buy
In the past, stamp duty disproportionately affected first-time buyers in the popular South East property market, where prices have, at times, outpaced London. Today, first-timers can breathe a slight sigh of relief, knowing that there’s one less tax to worry about.
However, and this is a big however, we cannot stress the importance of acting fast to take full advantage of this opportune shake-up in the market. If you see a property on the market which fits the price criteria, get on the phone to arrange a viewing!