The thought of buying your first home can be exciting but the reality is that times have been tough for first time homebuyers. However, in the 2017 Autumn Statement delivered on Wednesday 22 November there was welcome news in the announcement that stamp duty would be abolished on all first time buyer purchases up to £300,000, and on the first £300,000 of homes up to £500,000.
The treasury estimates the move, which has applied from 00.01 on 22 November, will mean 80% of first time buyers will no longer pay stamp duty.
Here we explain what it means for the first time buyer.
What is stamp duty?
Stamp duty land tax is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate at which you’ll pay the tax varies based on the property price.
So what’s the new system for first time buyers?
The new stamp duty rates for first time buyers buying properties costing up to £500,000 are as follows:
- Up to £300,000 purchase price: 0% stamp duty
- £300,000.01 to £500,000: 5% (on that portion of the purchase price only)
If you buy a first home costing more than £500,000, you won’t benefit from any change and will be buying under the standard system, which applies to non first time buyers too.
How much could you save?
First time buyers could save up to £5,000 on their stamp duty bills.
I’ve exchanged but not yet completed. When does this come into effect?
It’s actually already in effect, as of 00.01am on 22 November 2017.
The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you’ve exchanged prior to 22 November but not completed, you’ll be charged under the new first time buyer stamp duty system.
Who counts as a first time buyer?
Anyone who hasn’t owned a property before anywhere in the world, whether bought or inherited.
You also won’t qualify for the discounted rates if you’re buying to let – even if it’s your first purchase. The property you’re buying needs to be used as your main residence.
I’m a first time buyer but I’m buying with someone who isn’t. Do we get the lower rates?
If you’re a first time buyer jointly purchasing a home with a non first time buyer, sadly you won’t qualify for the first time buyer rates. You both need to be first time buyers.
Talk to your dedicated Mulberry Homes sales advisor today on 01582 797562 to discover the further possibilities now available to first time buyers. In addition, please visit our dedicated Help to Buy page here for information about the government Help to Buy initiative.