Stamp Duty for First-Time Buyers

Galliard Homes Limited

Preparing to purchase your first home is an exciting time when life-changing decisions will be made. Whether you’ve studied the ins and outs of purchasing a property or you’re a bit of a novice, Galliard Homes is here to help. Our expert sales team will guide you through every step of the process, from your first viewing to completion and beyond, which is why we’re one of the UK’s leading developers.

Understanding Stamp Duty Land Tax

Stamp Duty Land Tax (or SDLT as it is often called) is a tax that was introduced in 2003 on residential properties. It is a tax paid by the purchaser of the property and is calculated on the purchase price. Property prices are divided into bands with each band attracting tax at a different rate.

Thanks to the SDLT Holiday announced by the Chancellor in July last year in response to the coronavirus crisis, the threshold for SDLT currently stands at £500,000 (correct as of January 2021). The Holiday applies to anyone buying a property who intends to occupy it as their only or main residence so, as a first-time buyer, you can purchase a property up to this value without paying any tax. Purchases over £500,000 are above the current threshold and would therefore result in an SDLT payment being due. 

As an example, if you purchased a property valued at or below £500,000 you would pay no SDLT. If, however, you purchased a property at a value of say £600,000, SDLT would be payable on the excess over £500,000 at a rate of five percent (£5,000).

To find out more information about Stamp Duty, please click here.

What is a first-time buyer?

Put simply, a first-time buyer is a purchaser who has never previously owned a residential property in the UK or abroad and is purchasing a property to live in as their only or main residence.

If you are a couple, both of you must be first-time home buyers to benefit from the first-time buyer SDLT relief. If one of you has previously owned a property, that person would not be classed as a first-time buyer.

Those that have either inherited or been gifted a property also do not qualify as a first-time buyer as the rules are based on whether you have previously owned a property rather than whether you have previously bought a property.

Does it make a difference if I am a first-time buyer?

Prior to the current SDLT Holiday period it was important to distinguish first-time buyers from other property purchasers. This is because special rules applied specifically to first-time buyers.

Under the SDLT Holiday rules it makes no difference if you are a first-time buyer or if you are buying a property to replace one you already own.  In both cases you will pay no SDLT if the property value is no more than £500,000. When the SDLT Holiday period ends on 31 March 2021, however, we revert back to the pre-Holiday rules where there are preferential SDLT rates for first-time buyers of properties valued at no more than £500,000.

Stamp Duty Land Tax Holiday for first-time buyers

The SDLT Holiday has not only helped boost the flailing economy, but has provided a lifeline to budding first-time buyers eager to get onto the property ladder. As explained above, purchasers of residential properties completing between 8 July 2020 and 31 March 2021 can expect to benefit from reduced rates of SDLT up to the £500,000 threshold (previously £300,000). Those buying in higher-priced areas such as London and the South East will undoubtedly feel more of a benefit from the SDLT Holiday.

For first-time buyers, the saving can mean that this money can be better spent elsewhere. Legal fees, furniture and moving costs can soon mount up, causing an often unexpected drain on available cash.

How much Stamp Duty Land Tax will I pay as a first-time buyer?

The amount of SDLT you ultimately pay depends on the purchase price and the type of buyer that you are. To encourage first-time buyers to get onto the property ladder, the threshold is lower than for second home owners who are also liable to pay a surcharge. The easiest way to work out how much SDLT you will pay is by doing an online calculation which you can do here.

How do I pay Stamp Duty Land Tax?

When purchasing a property where SDLT is payable, you will have 14 days from the date of completion in which to settle the tax. This is usually handled through your solicitor as part of the purchase process, however you are still responsible for ensuring that this is done on time to avoid a fine.

What happens if my property completes after 31 March 2021?

After 31 March 2021 first-time buyers will pay no SDLT on properties valued at no more than £300,000.  If the value is between £300,001 and £500,000 then SDLT will be payable on the excess over £300,000 at five percent.  So, for example, a first-time buyer purchasing a property valued at £500,000 would pay SDLT of £10,000 (five percent of £200,000).

Extending the Stamp Duty Holiday with Galliard Homes

As we creep closer to 31 March 2021, many buyers will be starting to worry that their purchase may not complete in time to benefit from the tax relief. That’s where we can help. Galliard Homes is offering an extension to the Stamp Duty Holiday on purchases legally completing between 1 April 2021 and 1 October 2021 by deducting any SDLT, which would ordinarily be payable, from the completion sums which are due.

With many of our exciting new developments nearing completion, you could find yourself moving in to your new home in Wimbledon, Romford, Ealing or Southall (to name just a few) before the year is out.

Click here to find your dream first home and benefit from the SDLT Holiday with Galliard Homes.

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