As of 22 November 2017 the Stamp Duty Land Tax (SDLT) relief for first-time buyers could provide huge cost savings for people buying their first home.  But will the change in tax legislation also benefit property vendors who are selling their home?

What is Stamp Duty Land Tax?

Stamp Duty Land Tax is a tax that must currently be paid in England, Northern Ireland and Wales when purchasing residential land or property over £125,000. SDLT rates increase when additional properties are purchased, and the tax applies to freehold and leasehold properties.

Stamp Duty was devolved in Scotland on 1 April 2015, and was superseded by a tax called Land and Buildings Transaction Tax (LBTT).  Similarly on April 2018 the Welsh government will devolve Stamp Duty in Wales and instate a new Land Transaction Tax (LTT) instead.  What this means is that people buying their first home in Scotland currently, and in Wales from April 2018 will not be eligible for SDLT relief.

What is a First-Time Buyer?

The government defines a first-time buyer as somebody who has never owned (whether bought, inherited, gifted or otherwise) all or part of a property inside or outside of the United Kingdom.  Another stipulation of the first-time buyer tax relief opportunity is that the property you purchase must be your primary place or residence and not be a buy-to-let property.

If you are purchasing a property as part of a joint application, all parties must meet the aforementioned criteria to qualify for the SDLT tax savings.

How will Stamp Duty relief for first-time buyers affect buying a house?

The changes essentially mean that first-time buyers get tax relief (i.e., pay zero Stamp Duty Land Tax!) on residential properties under £300,000 when buying their first house. If the property sale value is between £300,000 and £500,000 the rate of SDLT is reduced, and above £500,000 there is no tax relief whatsoever.  The Stamp Duty Land Tax relief also applies to purchases under the Help to Buy scheme!

What if i exchanged contracts prior to 22 November 2017?  Am I eligible for tax relief?

Yes!  The tax relief applies to any property transaction that was completed on or after 22 November 2017.  The date you exchange contracts is irrelevant.  If you completed before this date you are unfortunately ineligible for the tax relief.

How will Stamp Duty relief for first-time buyers affect selling a house?

The new SDLT legislation for first-time buyers will inevitably see demand for properties under the £300,000 threshold increase significantly. And when demand increases, the price of properties within this price range will generally increase in tandem. You can use our free property valuation tool to gain an accurate estimation of your property value.

So who does the new SDLT legislation benefit the most – people buying a home, selling a home or even building a home?

There is more than one side to every story, and the Stamp Duty tax relief for first-time buyers is no different.  Will it fuel house price inflation until more homes are built?  Will the land banking developers profit from this new tax legislation?  Or will it help to facilitate first-time buyers getting on to the property ladder?  What’s clear is that the property market should see lots of activity over the next several months, and this could be a great time to buy or sell your home.