If you are a first-time buyer, the government may be able to help you avoid stamp duty by offering relief on qualifying purchases.
What is Stamp Duty?
Stamp duty is a tax on property transactions in the United Kingdom. It's used to pay for government services, and it applies to both residential and commercial properties.
If you're buying a home in the UK, you will have to pay stamp duty on the purchase price of your property. The amount of stamp duty you'll need to pay depends on which region of the UK you live in, whether your home is a flat or house, and what type of property it is (e.g., detached, semi-detached or terraced).
What is first-time buyer stamp duty relief?
When buying a house, the costs can quickly add up. The costs of owning a home are more than just mortgage payments.
Previously, if you're buying a house for £250,000 or less and using a solicitor, then your stamp duty will be £2,500 plus 3%. If you're buying a house for £250k - £925k and using a conveyancer, then your stamp duty will be 4% + £3,750 (or 5% + £5k if you've got no mortgage). If you're buying a house over £925k then your stamp duty will be 6% + £125k.
But from 23 September 2022, no stamp duty will be payable if the purchase price is under £425,000.If you are a first-time buyer, a higher stamp duty threshold will apply to you if you buy a property worth £425,000 or less. First-time buyer stamp duty relief can help you get on the property ladder, as it applies if you pay less than £425,000 for your first home and meet the necessary eligibility requirements.
Who are considered first-time buyer?
To be eligible as a first-time buyer, you must intend to live in the property as your main residence. A first-time buyer is defined as someone who has never owned a residential property anywhere in the world or inherited one. If you have previously been gifted a residential property or intend to use your new property as a buy-to-let investment, you will not be eligible for first-time buyer stamp duty relief.
If you’re buying a property with someone else, to qualify for relief, both you and the other party must be buying a house for the first time. If either of you previously owned a house jointly with a partner or spouse, relief is not available—regardless of whether you were a joint tenant or a tenant in common.
Stamp Duty Rates
For first-time home buyers buying a property worth less than £425,000, there is no stamp duty to be paid. For those purchasing property between £425,000 and £625,000, stamp duty is applied at a rate of 5% on the proportion of the purchase price above £425,000. For example, if you are a first-time buyer purchasing property at a price of £475,000, you would pay stamp duty of £2,500 (5% of £50,000).
How to Pay for stamp duty?
You can usually leave the filing of your Stamp Duty Return and any payment due to your solicitor, but you are responsible for making sure that it is all submitted on time.
If you're buying a property in London and need an estate agent to help you find your ideal home, then we can help. Bluestone Properties is in South London. We are experts in the marketplace and are dedicated to finding the right home for each individual client.
