Stamp duty will be abolished from 22 November 2017 for first time buyers buying a home valued up to £300,000 and on the first £300,000 of purchases up to £500,000. This means that no stamp duty will be payable if the purchase price is less than £300,000.
Buyers wanting to purchase their first home valued up to £500,000 will not pay stamp duty on the first £300,000 and will pay 5% on the amount above the £300,000 threshold.
Purchasers of a home costing more than £500,000 will not benefit from any change and will pay stamp duty under the existing system.
Stamp duty is usually not payable on properties worth less than £125,000 but rises considerably after this threshold and it is envisaged that nearly all first time buyers will benefit from the changes, including almost 80% of buyers in London.
Who is a first time buyer?
A first time buyer is defined as someone who has never owned a freehold or leasehold property and who is purchasing their only or main residence.
If you have owned residential property anywhere in the world, whether bought or inherited, you will not be considered a first time buyer.
As relief is only available to first time buyers who are buying a property that they intend to use as their only or main residence, it follows that buy to let purchasers of their first property will not benefit from the changes.
All purchasers in a joint purchase must be first time buyers. So, if your spouse or partner already owns a residential property, you will not be eligible for the relief.
What if you are a first time buyer and exchanged contracts on your purchase before the changes were announced?
The requirement to pay stamp duty is triggered when you complete the purchase of your property. If you exchanged contracts before 22 November but not yet completed, then you will be charged under the new first time buyer stamp duty system. It does not matter if your transaction was agreed before this date.
Unfortunately if you are first time buyer but completed just before 22 November, you will not be able to claim relief or a refund. The relief is only available for purchases that complete on or after 22 November 2017.