Prior to 22 November 2017, a first time buyer purchasing their first residential property, in England, Wales and Northern Ireland would have paid SDLT at the normal residential rates.
For transactions with an effective date of 22 November 2017 or later (usually this will be completion), a relief will be available for first time buyers where the following conditions are met:
- The transaction is the purchase of one residential property/dwelling
- The consideration for the property is not more than £500,000
- The purchaser (or if more than one purchaser, each of the purchasers) is a first time buyer, who is intending to occupy the property as their only or main residence.
- The transaction is not linked to another transaction, with the exception of linked transactions relating to gardens and grounds associated with the purchased dwelling.
Where the total consideration is less than £300,000 no SDLT will be payable. Where the total consideration is between £300,001 and £500,000, SDLT will be payable at 5%. The relief will need to be claimed via the SDLT return (Code 32).
If the consideration for the property is more than £500,000 then no relief will be available and the existing rates of SDLT will apply to the transaction. In addition, if one of the purchasers has previously owned a major interest in a dwelling, anywhere in the world, or does not intend to occupy the property as their only or main residence, then no relief will be available and the existing rates of SDLT will apply. This restriction could therefore impact first time buyers who are being aided by “Bank of Mum and Dad”, where they take a minor interest in the property. This relief is only available for individuals and not companies.
This additional SDLT relief will benefit first time buyers looking to purchase their first home on or after 22 November 2017 and could result in an SDLT saving of up to £5,000, compared to purchases before this date.
Given that the purchase of your first home is often the largest capital commitment by individuals, this relief will be welcomed. However, this relief is unlikely to address the fundamental problem of being able to afford the house in the first place.