The Autumn Budget 2017 has provided some good news for first time buyers in the process of purchasing a property or those who are looking to enter into the property market.
The Budget on 22nd November 2017 announced that first time buyers will be exempt from paying Stamp Duty Land Tax with immediate effect on the purchase of a property, up to the value of £300,000.00. Furthermore, where a property exceeds the £300,000.00 limit but costs no more than £500,000.00 in a high value area, the first £300,000.00 worth of that purchase price will also be exempt.
This announcement will undoubtedly be received thankfully by those people up and down the country who are looking to purchase their first home. There are however a number of loopholes which may mean that the exemption does not apply.
The Government guidance[i] published on 22nd November defines a first time buyer as one or more persons who are buying a residential property in the United Kingdom and who have never owned a property in the UK or anywhere else in the world. The property must also be purchased as a main residence.
This therefore means that the exception would not apply if you had previously owned a property abroad and were purchasing in the UK for the first time. Furthermore it would not apply in the event that the property was being purchased for investment purposes, for example as a buy-to-let property. In these circumstances Stamp Duty Land Tax would be payable at the standard rates.
In addition to the criteria that form the definition of a first time buyer, property purchasers should be aware of any ownership of, in part or in full, although they may not have actively taken the steps to complete a purchase of that property. The two examples which have been provided by the Government via their Stamp Duty Land Tax calculator[ii] are:-
- Properties inherited under a will
- Properties owned by a trust under which the purchaser in question is a beneficiary
Having ownership of a property in either of these two circumstances would mean that the Stamp Duty exemption for a first time buyer does not apply, regardless of whether the property was wholly or partly owned.
While there are certain criteria to be met in order to qualify for the exemption, the announcement made on 22nd November is sure to provide some relief to those looking to get their foot on the property ladder.