Christmas came early for first-time buyers when the Chancellor, Philip Hammond announced they would no longer pay stamp duty on properties worth up to £300,000.
The waiver, declared in his November Budget, is for homes worth up to £500,000. This means if the property is worth between £300,000 and £500,000, buyers will get partial relief, paying no stamp duty on the first £300,000, and paying the standard 5% on the remaining amount.
So on a home worth £500,000 the bill would total £10,000 rather than £15,000.
The Chancellor claims the perk - introduced with immediate effect - will apply to 80% of first-time buyers.
There will be no relief for those buying properties over £500,000.
Only buyers who have never previously owned a home will qualify. Even those buying jointly, will both need to be first-time buyers to benefit from the waiver which applies to first-time buyers in England, Northern Ireland and – up until the end of March – Wales, but not in Scotland.
As stamp duty is payable on completion, even first-time buyers who have already exchanged can benefit from the exemption or discount.
There’s also good news for those who might find themselves unwittingly having to pay the 3% stamp duty surcharge on a new property. An exemption is now available on the surcharge – designed to penalise buy-to-let investors and those buying second homes – in situations such as if a spouse or civil partner buys property from their spouse or civil partner, or if a divorce related court order prevents the sale of the family home.
The surcharge can significantly increase the bill. A property worth £500,000 would attract a stamp duty bill of £15,000. But if the additional rates apply the tax bill would be double at £30,000.
Paula Steele, managing partner at John Lamb Financial Planning, says: “The new stamp duty rules should make it easier for some first-time buyers to buy a home sooner if the tax reduction means they can save the deposit they need faster. The fact that no relief is available for those buying properties over £500,000 might be little help to first-time buyers in London.
“The exemption of the 3% stamp duty surcharge will be a relief to many caught out unfairly by the higher rate. While the policy was aimed at landlords, it has had a range of unintended consequences since its implementation in April 2016. An exemption for the right individuals is a sensible move.”