In the Autumn Budget presented on 22 November 2017 (“November 2017 Budget”), the government announced the abolishment of Stamp Duty Land Tax (SDLT) for first-time buyers purchasing homes with a value of £300,000 or less. First-time buyers purchasing a property above £300,000 valued up to £500,000 will also benefit as they will not pay stamp duty on the first £300,000 and only pay 5% on the price between £300,000 and £500,000. However, those purchasing a property for over £500,000 will not benefit from the exemption.
To be considered a first time-buyer for the purpose of benefitting from this exemption, you must not currently own or have previously acquired a property or any interest in a property anywhere in the world. This includes acquiring a property by way of inheritance or a gift.
If you are jointly purchasing a property and one of the parties has previously acquired an interest in a property, the exemption will not be available and the current stamp duty rates will apply.
What is Stamp Duty?
SDLT will apply if you buy a property or land, whether residential or commercial, over a certain price in England, Wales and Northern Ireland. Currently, if you purchase a residential property with a value of £125,000 or higher, you will need to pay SDLT in accordance with the current rates.
The Current Rates
Property Value SDLT rate
Up to £125,000 Zero
The next £125,000 (£125,001 to £250,000) 2%
The next £675,000 (£250,001 to £925,000) 5%
The next £575,000 (£925,001 to £1.5 million) 10%
The remaining amount (above £1.5 million) 12%
What does this mean in practice?
The average house price in Norfolk is £258,231. To apply the current first-time buyer relief, and to put these changes into perspective, if you were to have bought a property at this price as a first-time buyer prior to the November 2017 Budget, you would have paid £5,164.62 in stamp duty. Today the liability would be £0.00.
Similarly, for those deciding to purchase a home in Norwich, the average house price is £196,987. Subsequently, a first-time buyer would have paid £1,439.74 in stamp duty. Today the stamp duty charge would be £0.00.
As previously mentioned, if you are a first-time buyer and decide to purchase a home which is over the price of £300,000 you also stand to benefit from the stamp duty adjustments. For instance, if you were to have bought a property for £320,000 before the November 2017 Budget, you would have paid £6,000 in stamp duty. Today, if you were to buy a property at the same price, the liability would be £1,000. This would be calculated as follows:-
- £0 - £300,000 @ 0%
- £300,000 - £320,000 @ 5% (5% of £20,000 - £1,000)
If you are looking to become a first-time buyer and have any initial queries, we have an experienced Residential Conveyancing Team to assist with your purchase. If you would like to discuss a quote then please do not hesitate to contact the team on 01603 610911.