Stamp Duty for First-Time Buyers
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.
The information within this article was accurate when it was written on 10th March 2021. Stamp Duty Land Tax rates were amended on 1st October 2021; for up-to-date information please refer to our Stamp Duty guide. Any offers listed are subject to terms and conditions and expiry dates may apply.
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 was temporarily increased to £500,000. The Holiday was applicable to anyone buying a property intending to occupy it as their only or main residence so, as a first-time buyer, you could purchase a property up to this value without paying any tax. Purchases over the threshold would 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).
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 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 made no difference if you were a first-time buyer or if you were buying a property to replace one you already own. In both cases you would have paid no SDLT if the property value was no more than £500,000. When the SDLT Holiday period ended on 30 June 2021, we reverted 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 30 June 2021 benefitted 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 undoubtedly felt more of a benefit from the SDLT Holiday.
For first-time buyers, the saving meant that this money could 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 was 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 using our handy stamp duty calculator.
Read our guide to the latest stamp duty threshold changes.
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 30 June 2021?
After 30 June 2021 first-time buyers 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
Galliard Homes is offering an extension to the Stamp Duty Holiday on selected purchases that exchange before 31 January 2022 by deducting any SDLT up to the value of £25,000, 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 into your new home in Wimbledon, Romford, Ealing or Southall (to name just a few) before the year is out.