By Diane Cooke
Chancellor Philip Hammond scrapped stamp duty for many first-time buyers in his last Budget.
From November 22, 2017, people buying a first home priced up to £300,000 will pay no stamp duty.
Stamp duty relief will also be available on the first £300,000 of the purchase price of properties up to £500,000, to reduce the costs for first-time buyers in high-price areas, such as London.
The Treasury calculates this will reduce property tax for 95 per cent of first-time buyers, and means that 80 per cent of them will pay no stamp duty at all.
If a property is worth £450,000, you will pay no Stamp Duty on the first £300,000 and 5% on the remaining £150,000.
Under the old system, first-time buyers would pay £12,500 in Stamp Duty on this £450,000 property. The new system means they will pay just £7,500.
However, according to Robert Gardner, Nationwide’s chief economist, the changes to stamp duty are unlikely to have much of an effect.
“The decision in the Budget to abolish stamp duty (SDLT) for first-time buyers purchasing a property up to £300,000 (with relief for those purchasing a property up to £500,000) is likely to have only a modest impact on overall demand,” he said. “In many regions, first-time buyers already paid little or no stamp duty as the price of the typical first-time buyer property was below the previous threshold of £125,000. The potential savings are more substantial for borrowers where house prices are higher, especially in London and the south-east.”
As the Office for Budget Responsibility had already noted, some of the benefit is likely to be passed on to existing homeowners through higher house prices, though overall impact on prices is likely to be very modest.
But the advice from some experts is to take advantage of the tax relief before house prices rise further, as savings can still be made.
To be classified as a first-time buyer you must never have owned a residential property in the UK or abroad. This includes freeholds and interests in leaseholds.
You must also be purchasing your only or main residence. This means first-time buyers cannot get Stamp Duty relief on buy-to-let properties.