Budget 2017 – a Must-Read for First-Time Buyers

In his budget, the Chancellor Philip Hammond confirmed that the government would be making changes to the amount of money due to HMRC by first-time buyers.

The big announcements are that stamp duty will be abolished for first-time buyers on property purchases up to £300,000. The Chancellor has also confirmed that in areas of high-cost housing where property purchases are over £300,000 (but under £500,000), the first £300,000 of the purchase cost will be free of stamp duty.

While we can be certain that any reduction on stamp duty is good news for first-time buyers, there are probably individuals out there who have questions as to whether they qualify for one (or both) of the above initiatives. We’ve attempted to assist by answering some of the more pressing questions below.

Am I a qualifying first-time buyer?

The government guidance confirms that a first-time buyer is defined as “an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world, and who intends to occupy the property as their main residence.”

What is an ‘interest in property’?

The government guidance says that you can be deemed to have had an interest in property if you’ve ever bought a property, inherited a property or if you are a beneficiary of a trust that owns a property.

What is my spouse owns, or has owned a property in the past?

The government has yet to provide specific advice on this point but so far the wording indicates that both purchasing parties would need to qualify as a first-time buyer under the above definition.

My property purchase is over £300,000. Will I qualify for the reduction? And what will I have to pay on the rest?         

Initial guidance states that all qualifying first-time buyers paying between £300,000 and £500,000 will pay SDLT at 5% on the amount of the purchase price in excess of £300,000; a reduction of £5,000 when compared to the amount of SDLT they would have previously paid. The government has not stated at this time if this will be restricted to any specific areas.

I’m a first-time buyer but my property purchase is over £500,000. Do I qualify?

First-time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates on the entirety of the purchase price as if they were not a qualifying first-time buyer.

When will this come into effect? I plan to complete as soon as possible?

The scheme has been launched with immediate effect, so make sure you notify your solicitor that you are a first-time buyer and make them aware that you are eligible for the reduced stamp duty amount before completion.

I’m a qualifying first-time buyer and I completed before 22^nd November 2017. Will I be eligible for a rebate?

At this time, the government has not released any guidance as to whether any previous purchasers will be eligible for a rebate.

If you would like to see further guidance from the government, please click here.

MORE INFORMATION 

If you are a first-time buyer and would like further legal advice about the changes in place regarding stamp duty, please contact a member of our Residential Property team for impartial legal advice. Call on 01708 229444 or email us using our contact form.This article was written by Richard Collins, Solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of December 2017.