Autumn Budget – SDLT - Good News for First Time Buyers?
Yesterday’s Autumn Budget saw the most anticipated change come into fruition – abolition of Stamp Duty Land Tax (SDLT) for first time buyers. The change has been with immediate effect and has already split critics.
Although the abolition is brand new, it appears that it will benefit more than 95% of first time buyers. Stamp duty will be taxed at 0% for properties up to £300,000. If the property is more than £300,000, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from SDLT, with the remaining £200,000 incurring a 5% charge.
This will mean that the maximum amount a first-time buyer will have to save for SDLT, if they are purchasing a home for half a million pounds, will be £10,000. Before the cut, a £500,000 home would cost any purchaser £15,000 in tax – a saving of £5,000 for first time buyers. A £300,000 home will save £5,000 in tax for a first-time buyer. In both scenarios, first time buyers can save a maximum of £5,000 which can be used to fund the deposit or pay towards conveyancer’s fees.
This appears to put first time buyers in a better position to buy a home, rather than pay high rent prices which can total more than a monthly mortgage repayment. The main issue for first-time buyers was always saving for the deposit, and the huge saving of £5,000 for a first home can certainly aid this saving.
Critics now question whether this will raise property prices. The Office for Budget Responsibility has said the tax break was likely to push property prices up by about 0.3%, with most of the increase coming in 2018. A damning report on an otherwise exciting moment for first-time buyers.
However, we will now just have to wait and see what the impact of both Brexit and the change in SDLT will have on the property market in the next 12 months…