Buying December 7, 2017

Stamp duty changes for first-time buyers: what does it all mean?

Stamp Duty is changing for first-time buyers. 

In the Budget 2017, Chancellor Phillip Hammond announced that Stamp Duty would be exempt for people buying their first property if it costs under £300,000. For first homes under £500,000, you won’t have to pay Stamp Duty on any the first £300,000, which will reduce the amount you need to save. 

How much could you save? 

On a £300,000 home, first-time buyers won’t have to pay any Stamp Duty, instead of a £5,000 charge.  

For a £500,000 property, Stamp Duty will now be £10,000 instead of £15,000. 

If your first home costs over £500,000, you will not get a discount. 

Watch our quick video to get a great overview of the changes and what they mean: 

Compare your savings with this table: 

Property pricePrevious Stamp Duty costNew Stamp Duty cost for first-time buyersSaving 

When does it start? 

These changes are in place now, and came into place on the day of the Budget announcement on the 22nd November 2017. The changes will continue permanently. 

Why has it been changes? 

This is designed to make it easier for more people to get onto the housing ladder. It will mean that first-time buyers will have to save slightly less before they buy a home. 
It is hoped that it will make the property market move faster at all levels. As there should be more first-time buyers, it will encourage people to take a second step on the ladder, putting more homes on the market. This should help people moving both up and down the housing ladder. 

What requirements do you have to meet as a first-time buyer?

If you’re buying with a partner, relative or friend, all the people buying need to be first-timer buyers to register for the discount. This means you will have never owned a freehold of leasehold interest in a dwelling before, and you must be purchasing the property to be your only or main residence. 
This includes property all over the world, so if you have a flat in France, you won’t be able to be a first-time buyer in the UK. 

What does this mean if your parents are going to jointly buy with you? If your parent has previously bought a house is going to jointly buy a property with you, the sale will not be eligible for a discount. However, you could apply for a “joint borrower sole proprietor” mortgage with a parent. Read this article to find out more

Does it apply to both leasehold and freehold?

The new changes apply to people buying both freehold and leasehold properties, as long as the lease premium is under £40,000 and tax isn’t due on rent.

What about shared ownership homes? 

The system works the same for first-time buyers who are buying shared ownership in a property. 

If you buy a property that has a value of £300,000 and you buy 50% of the home, you will pay £150,000. Under the new Stamp Duty changes, you will not have to pay any Stamp Duty because the value that you are paying for the property is under the £300,000 threshold for first-time buyers. 

It all means that it should make it easier for first-time buyers to get on the property ladder and make the housing market move faster at all levels.

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