From 22 November 2017 the government has announced changes to Stamp Duty Land Tax (SDLT) which will affect first time buyers purchasing a residential property. The changes were announced by the Chancellor, Philip Hammond at the Autumn Budget 2017.
Where do the changes apply?
The changes apply in England, Wales and Northern Ireland. The changes do not apply to properties purchased in Scotland. The changes will only apply to properties purchased in Wales up to 1 April 2018.
What are the changes?
With immediate effect:
First time buyers paying a purchase price of £300,000.00 or less for a residential property will pay no SDLT;
First time buyers purchasing a residential property for more than £300,000.00 up to £500,000.00 will pay SDLT at 5% on the amount of the purchase price which exceeds £300,000.00. This reflects a reduction of £5,000.00 when compared to the amount of SDLT which would have been payable under the old rules.
First time buyers purchasing a property in excess of £500,000.00 will not be entitled to any relief. In these circumstances, SDLT will be payable at the normal rates.
Why have changes been introduced and how will they affect the housing market?
The changes have been introduced in an effort to support first time buyers and illustrate the government’s commitment to supporting home ownership. The government has been under pressure by critics to do more to help first time buyers to get onto the property ladder as SDLT is widely seen as being a major deterrent to house buyers in addition to putting pressure on the UK housing market. It is hoped that the new changes will make housing more affordable and result in more people being able to get on to the property ladder.
The new changes have been criticised by those in London for being limited to properties of £500,000.00 and under. As a result, the vast majority of London buyers will still be affected by the normal rates. In addition, critics argue that the changes will lead to house prices increasing on the basis that SDLT no longer has to be factored in as a disbursement in a large proportion of first time buyer transactions.
SDLT is a complex area and it is important when purchasing a property that you are fully aware of any tax liabilities you may face. At Farleys, we are equipped to deal with any SDLT queries which arise on the purchase of a property. Please do not hesitate to contact us today to speak with one of our property solicitors on the implications of SDLT and how this may affect you. Call 0845 287 0939 or send your enquiry online.