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A guide to stamp duty for First Time Buyers

View profile for Julia Gaunt
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A guide to stamp duty for First-Time Buyers

Stamp Duty is an important consideration for home-buyers, especially for first time buyers; who may not be aware of stamp duty and how it affects them.

In this article, Conveyancing Solicitor Julia Gaunt provides a guide to stamp duty for first time buyers, outlining the SDLT rates for first time buyers and the first time buyer stamp duty threshold.

Update: As of 23rd September 2022, a 'permanent' cut on SDLT has been put into place for first-time buyers. 

First-time buyers who are buying a home for £425,000 or less are now exempt from paying stamp duty land tax.

And first-time buyer will now be able to claim relief on homes worth up to £625,000.

What is stamp duty for first time buyers?

Stamp duty is a tax that is imposed on single property purchases or documents. Property purchases in which stamp duty is imposed, include:

  • Freehold property
  • New or existing leasehold
  • Shared ownership properties
  • And, the transfer of land or property in exchange for payment

Stamp duty is different if you live in Scotland or Wales. Scotland use the Land and Buildings Transaction Tax (LBTT), and Wales use the Land Transaction Tax (LTT).

Please refer to the links provided above for more information if you live in Scotland or Wales.

Related: How much is stamp duty in commercial property?

Do first time buyers pay stamp duty?

This depends, if you are a first time buyer purchasing a home that costs £300,000 or less; then no – you are exempt and will not pay stamp duty.

If you are purchasing a home which is priced higher than this 'first time buyer stamp duty threshold', you will only have to pay stamp duty on the value above £300,000 if the property is valued under £500,000.

If the property costs more than £500,000, then you will not be entitled to any SDLT relief and will pay SDLT at the normal rate.

This SDLT relief for first-time buyers was first introduced in November 2017. But how does stamp duty work for first time buyers? I outline this below.

How much is stamp duty for first time buyers?

The stamp duty brackets for first time buyers are as follows...

For those who fall between the £300,000 and £500,000 bracket, you will pay stamp duty at 5% on the amount of the purchase price. This is £5,000 less than you would have usually paid if the first time buyer relief was not in place.

Do I qualify for first time buyer SDLT relief?

To be eligible for SDLT for first time buyers, you must be considered a first time buyer. This means:

  • You have never owned an interest in a residential property in the UK or abroad
  • You intend to occupy the property as your main residence

If you tick these to boxes, then yes – you qualify!

If you don't tick these boxes, then you can find out stamp duty will be for you here.

What is stamp duty holiday?

A stamp duty holiday was first introduced in July 2020, to help buyers whose finances were affected by the coronavirus pandemic. The holiday essentially meant that homebuyers in England & Ireland wouldn’t have to pay any stamp duty tax on properties up to £500,000.

This holiday was great for first time buyers, who benefited from the tax-free threshold of £500,000.

Has stamp duty holiday ended?

No, but stamp duty rates have changed.

What are the current rates of SDLT?

The point from which homebuyers start to pay stamp duty is £125,001. Below are the current SDLT rates:

  • £0-£125,000 = 0%
  • £125,001-£250,000 = 2%
  • £250,001-£925,000 = 5%
  • £925,000-£1,500,000 = 10%
  • £1,500,000+ = 12%

For first time buyers, you’ll be pleased to know that you are still exempt from paying stamp duty on property purchase less that £300,000. Again, this is due to the first time buyer SDLT relief.

    Specialist First Time Buyer Solicitors

    If this article has raised any queries, please do not hesitate to get in touch with one of our expert Residential Property Solicitors. Please contact us on 01202 499255.

    We offer all new clients a free initial chat with one of our bright, friendly lawyers over the phone or by video call.

    The content of this article, blog or video is not intended as specific legal advice. For tailored assistance, please contact a member of our team.

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