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?

 

Before Budget

22nd November 2017 onwards

£200,000

£1,500 £0

£300,000

£5,000

£0

£400,000

£10,000

£5,000

£500,000 £15,000

£10,000

Above £500,000

SDLT regime is unchanged. The usual rates apply

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.

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