A recent survey by online broker L&C Mortgages revealed that almost a third of the first time buyers they asked in England don’t know that the changes to Stamp Duty Land Tax (SDLT) introduced in the 2017 Autumn Budget are good for them, re-introducing First Time Buyer Relief from 22nd November 2017.
First time buyers purchasing their first home for £300,000 or less will pay no SDLT. If the purchase price is over £300,000 but not more than £500,000 they will pay 5% on the amount above £300,000. By comparison, other buyers purchasing for £500,000 would pay 2% of the amount from £125,001 and £250,000, and 5% on the amount from £250,001 and £500,000.
This means that a first time buyer paying £500,000 for a property would pay £10,000, compared to £15,000 for other purchasers (excluding purchasers of second residential properties and corporate purchasers). Worryingly though, 13% of first time buyers thought that the First Time Buyer Relief could save them more than £5,000.
Of the first time buyer’s surveyed, 52% thought they would benefit from the First Time Buyer Relief when they buy their first home, whereas 42% of those aiming to buy a property priced between £125,000 and £500,000 either thought that the SDLT relief would not benefit them or didn’t know if it would.
Interestingly, 22% had not changed their minds on the price of the house they wanted to buy as result of the SDLT changes, possibly because they do not fully understand the new rules and how they can benefit from them. This theory is supported by 38% of those surveyed did not know how much they would save if they bought their first home now, while 62% said they believe that the tax should be abolished for all first time buyers.
Even for regular property buyers the SDLT rules can be complicated, especially since the introduction of the SDLT Higher Rates, but there is concern that the widespread lack of understanding of the SDLT among first time buyers means that some of those wanting to get onto the property ladder believe it to be one step further away than it actually is.
If you are a first time buyer and in any doubt about what savings you can make by taking advantage of the First Time Buyer Relief for SDLT, please contact our conveyancing team who will be able to advise as to your SDLT liability. Whatever you do, if you are a first time buyer, make sure your conveyancer knows as otherwise they may not apply the Relief when submitting the Land Transaction Return to the Inland Revenue on your behalf following completion. Call 0845 287 0939 or email our conveyancing team today.
Please note that the information in this blog is correct at the time of publishing but First Time Buyer Relief may be repealed in subsequent Budgets, so please always check with your conveyancer as to the current position with regard SDLT.