The Chancellor announced some welcome changes for first-time buyers (“FTBs”) to the Stamp Duty Land Tax (“SDLT”) regime in his Budget on 22nd November. From this date, FTBs of residential property of up to £500,000 will benefit from the following:
1.For purchases of up to £300,000, no SDLT will be payable. This represents a considerable increase from the previous nil rate band of £125,000.
2.For purchases of up to £500,000, SDLT is payable at 5% only on the £300,000-£500,000 band.
Conditions
For a FTB to benefit, the purchase price must not exceed £500,000. Where the purchase price exceeds this threshold the relief will cease to be available and the standard rates will apply.
As this relief is specifically aimed at FTBs, where a buyer has (or did have) residential property anywhere else in the world, they will not qualify for the relief. If a property is bought by joint purchasers, the purchase must be a first-time purchase for all of them.
How does this relief affect the amount of SDLT payable?
HM Treasury claims that 95% of FTBs who pay SDLT will benefit from this change, including almost 80% of FTBs in London. It predicts that the SDLT bill of the average FTB in London will nearly halve, from £10,500 to £5,500.
Our thoughts
While any help afforded to FTBs anxious to get on the property ladder is welcome, SDLT is hardly the main hurdle. The large deposit size and high loan-to-value ratio arguably presents the biggest problem to FTBs. It remains to be seen whether the revised SDLT regime will be reflected in an increase of FTBs.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.