Do you qualify for first time buyer stamp duty relief and exemptions?
Friday 5 January, 2018
Thomas Oliver’s London Mortgage Broker and protection specialist, Errol Hall, reviews the recent stamp duty relief and exemptions announced for first time buyers.
On the 22nd November 2017 the Chancellor announced a stamp duty reprieve for first time buyers effective immediately. This is great news for most buyers looking to get on the property ladder for the first time because you no longer have to worry about the extra stamp duty costs incurred during the house buying process, so you don’t have to save as much.
If you have already saved your deposit when agreeing a property purchase, you should be able to save up the solicitor and financial advice fees, which is usually payable during the 3 month transaction process.
The stamp duty reprieve is not applicable to everyone and is not without its caveats, so below are the key elements to determine if it is applicable to you.
Do I qualify for the new stamp duty relief and exemptions?
The new stamp duty discount is only available to first time buyers. The Chancellor’s definition of a first time buyer is someone who hasn’t owned a property before, so it will not apply to you if you have already purchased or inherited a property. It also doesn’t include properties purchased and owned in other countries.
Key features of the new stamp duty relief and exemptions
If you are a first time buyer and you are buying with a non-first time buyer you will NOT benefit from the new stamp duty discount.
Another key feature is that you have to live in the property so a buy-to-let investment purchase is excluded.
The final key element is that your purchase price has to be below £500,000 to benefit from the potential saving of £5,000. If you are purchasing a first home for over £500,000, whether you are a first time buyer or not, you will be charged the standard rate of stamp duty.
Now you should have a basic understanding of whether or not you are applicable to the stamp duty benefit for first time buyers, so the key question is how much could you save?
How much could you save from stamp duty relief and exemptions?
Based on current stamp duty charges as long as all the stipulations are met above and you are purchasing a home for £500,000 or under, the first £300,000 is stamp duty exempt meaning you could pay no stamp duty at all if your property costs under £300,000.
If you are purchasing a home for £500,000 then you would save £5000 (the stamp duty for the first £300,000 that is now exempt). However you would pay stamp duty from £300,000- £500,000 at the standard rate, this means you will halve your stamp duty charge from £10,000 to £5000.
Errol Hall, Mortgage Broker and protection specialist in London & Cheshunt, Hertfordshire said:
‘Hopefully you now understand the stamp duty relief and exemptions that the Chancellor has put in place for first time buyers purchasing their first home. I recommend if you are a first time buyer you contact your financial adviser for a financial planning review as they will be able to explain how the stamp duty changes relate to your own financial circumstances. At Thomas Oliver we offer mortgage advice to clients across Hertfordshire and North London. Please contact me as soon as possible if you are looking to purchase your first home. Some strategists have predicted that there will be an increase in house prices in the second quarter of next year as more first time buyers take advantage of the stamp duty exemptions.’