Stamp Duty Changes Benefit First Time Buyers
Dec 1, 2017
Stamp Duty has always been an unwelcome addition to the cost of buying a home.
But, more than that, it has been seen by some as a prohibitive tax; something that, along with ever-increasing levels of deposits, has been standing in the way of home ownership. And it may have affected one group in particular: cash-constrained first-time buyers.
Last week’s Budget sought to address that. The Chancellor announced significant changes to the Stamp Duty regime, to lessen the financial burden on people who want to buy their first home:
- Stamp Duty has been abolished for first-time purchases up to £300,000.
- Purchases of between £300,000.01 and £500,000 will attract a lower rate of Stamp Duty than previously; now 5% on the proportion of the price in that band.
What will this mean for you?
You will only be affected if you are a first-time buyer. That means someone who hasn’t owned a freehold or leasehold interest in a home before and is buying their only or main residence. If you are buying with someone else, you both (or all) need to be first-time buyers.
If you are a first-time buyer of a property costing more than £500,000, you won’t benefit from Stamp Duty relief; the rate payable on those properties is unchanged. This reflects the Government’s focus on helping those homebuyers who are in greatest need.
And the changes will only apply in England Northern Ireland, and Wales until the end of March 2018 when Stamp Duty becomes devolved to Wales.
What will be the wider effect?
The ‘average’ first-time buyer should now pay no, or significantly less, Stamp Duty than previously. The Government expects more than a million first-time buyers to be helped to get onto the housing ladder in the next five years as a result of this rule change.
Of course, that remains to be seen. But we are hopeful that people who have struggled to finance their first purchase may now be able to do so. Amid speculation that house prices will rise as a result of the new rules, however, there will undoubtedly be challenges ahead. Not least of these is the continuing requirement to put down a substantial deposit.
Our advice to all home buyers is to get to know what help is available to you, whether in terms of tax relief or a Government scheme – or both. Understanding, and taking advantage of, these opportunities is all part of building your future.
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