In last week’s budget, the Chancellor of the Exchequer, Philip Hammond abolished stamp duty for first-time buyers on all properties valued up to £300,000 with a view to helping young buyers onto the property ladder and creating more movement across the housing market.
The changes could see first-time buyers saving in the region of up to £5,000, meaning they’ll have more money to put into their deposit or to cover the legal and administration costs associated with home-buying.
So how is stamp duty changing?
Before the changes were announced in the budget, all first-time buyers had to pay stamp duty on property purchases over £125,000. With many paying much more than this for their first homes, the treasury suspect that around 80% of first-time buyers will not have to pay any stamp duty. The changes also mean that those buying properties that cost between £300,000 and £500,000, whilst still having to pay stamp duty, will actually pay significantly less than they would have done prior to the announcement.
I am just about to buy my first home – how much will I save.
Anyone who is buying a property valued up to £500,000 will save money.
Previously, buyers who bought a home costing between £125,000 and £250,000 had to pay 2% stamp duty (on every pound over the £125,000 threshold), and those valued between £250,000 to £925,000 had to pay a 5% charge.
For example, this meant that a £200k property would have set you back £1,500 and a £300k property would have cost you a huge £5,000. Now these properties won’t cost you anything in stamp duty – a significant cash boost to the pockets of first-time buyers.
Am I eligible?
If you are a first-time buyer then yes, these changes will benefit you. To be classed as a first-time buyer you must have never owned a property (freehold or leasehold, in the UK and overseas) prior to this purchase, and you must be purchasing the property as your sole residence i.e. not intending to rent out the property.
If you are currently renting, having sold a property previously, you are not classed as a first-time buyer. If you are buying a home with a friend or a partner, all parties much be defined as first-time buyers to be eligible for the stamp duty cuts.
Will these changes work for everyone?
Whilst some see the stamp duty cut as an incentive to first-time buyers struggling with their finances, others are predicting that it could cause problems across the housing market, sending property prices soaring once again.
Reducing the amount of stamp duty paid by first-time buyers means that they are more likely to be able to afford higher deposits, which in turn could push up house prices even further – if so this could benefit property vendors more so than actual people that the Chancellor is trying to target.
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The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
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