Stamp Duty and the first time buyer (England only)

From 22 November 2017 'First Time Buyers' have benefited from a concession in respect of stamp duty land transaction tax (SDLT), commonly known as stamp duty, to reduce their upfront costs and this was subject to an important change in the 2018 Budget for buyers of shared ownership leases.

This applies only to property in England. A separate system of tax has applied to Wales since 1 April 2018, and there is no equivalent of this relief available for property in Wales.

Shared Ownership leases

Buyers have the option to pay SDLT on the full market value of the property, or only based on the price of the share then being bought. However if they did not make the market value election then they were not eligible for first time buyer relief. This was changed and from 29 October 2018 the relief was extended to include first time buyers purchasing through approved shared ownership schemes who do not elect to pay SDLT on the market value of the property but instead pay SDLT in stages. This extension applies retrospectively from 22 November 2017 onwards.

Refund deadline of 29 October 2019

Any buyers' of shared ownership leases from 22 November 2017 to 29 October 2018 who would have otherwise qualified for the relief and not already claimed a refund have until 29 October 2019 to do so.

What are the conditions to claim the relief?

• An individual or individuals jointly purchase one wholly residential property, at a price of not more than £500,000;
• where that individual (or all of them) intends to occupy the property as his/her or their only or main residence and;
• that individual (or all of them) has or have not, whether alone or with others, previously owned/acquired a freehold or leasehold interest in residential property in the UK (except a lease with less than 21 years to run) or an equivalent interest anywhere in the world.

If the conditions are met then no SDLT is payable on a purchase price of £300,000 or less. If the purchase price is over £300,000 then tax at 5% is payable on the part of the purchase price paid in excess of £300,000. If the purchase price is over £500,000 then normal rates apply to the whole of the purchase price.

Questions & Answers

What is a first time buyer?

A person who has not owned/acquired a freehold or leasehold interest in residential property in the UK (except a lease with less than 21 years to run) or an equivalent interest anywhere in the world.

When is the relief available?

The relief is available for transactions with an effective date (usually the completion date) on or after 22 November 2017. No end date has been given.

I want to buy a house with my partner but one of us has previously owned a residential property. Can we claim the relief?

No. All of the buyers, when there are more than one, must be a first time buyer.

I previously bought a house jointly with my spouse/partner. The partnership has broken up so can I be treated as a first time buyer?

No. Where the individual has previously acquired an interest in a residential property as a joint tenant or a tenant in common the individual is not a first time buyer.

Is the relief available on transfers of interests in a home between partners?

Such a transfer normally requires a transfer from the existing owner to him/herself and the partner. Even if the partner is a First-time buyer the existing owner is not. So the relief is not available.

Can I get relief if I have previously owned an inherited property?

No. In this case a person will previously have acquired a major interest in a residential property.

Can I claim the relief if I'm buying on behalf of my parents?

No. Relief is not available unless the first time buyer(s) are buying, for themselves, a property that they intend to use as their only or main residence.

Is there an age limit on claiming the relief?

No. First time buyers can be of any age.

Is there a price limit on claiming the relief?

Yes, the sum for the whole of the purchase must not exceed £500,000.

Please note the information is as available at the time of posting. This article is not intended as a definitive statement of the law nor a substitute for legal advice. Always consult your conveyancer.