Stamp duty for first-time buyers

Stamp duty for first-time home buyers

Buying your first home can be an exciting step. When you’re looking for a property, though, you may want to bear in mind that the costs aren’t limited to the price of buying the place. There are other costs and fees that you’ll need to consider. Knowing what these are can help you to budget for your home purchase.

One of these costs is Stamp Duty Land Tax (SDLT), which is a tax on your property or land in England and Northern Ireland. How much you’ll have to pay depends on a number of factors, like the price of your home, and whether you’re a first-time buyer.

In an effort to boost the economy and get first-time buyers back in the market following the coronavirus outbreak and lockdown, there was a temporary Stamp Duty Land Tax holiday announced in July 2020 by the government. What does this mean for a potential first-time buyer and what could you have to pay?

Who qualifies as a first-time buyer?

The answer to the question ‘Am I a first time buyer?’ is straightforward. You’re a first-time home buyer if this is the first property that you’re buying to live in.

Help and information for buying your first home

You can find some resources here. The article points you in the direction of some of the things that first-time home buyers need to know, including first home checklists. There’s also information for first-time home buyers in the Equifax Homebuyer’s Handbook, which also explains the budgeting and mortgage process for anyone buying a home.

Are first-time home buyers exempt from buying stamp duty?

First-time buyers get a relief on stamp duty, on properties up to a certain value.

After the stamp duty holiday was announced, both first-time buyers and people who have already owned a property will no longer pay stamp duty on a main property up to the value of £500,000 if the sale is completed between 8 July 2020 and 31 March 2021. If the property you’re buying costs more than £500,000, you will pay stamp duty – even as a first-time buyer- based on the revised bands.

When the stamp duty holiday is over, what are stamp duty rates for first-time home buyers?

The stamp duty holiday is valid on any property sales completed between 8 July 2020 and 31 March 2021. However, from 1 April 2021 , first-time buyers will still be eligible for relief. You’ll pay less or no tax if both the following apply:

  • you, and anyone else you’re buying with, are both first-time buyers
  • the  property you are buying is £300,000 or less

You will also only pay a reduced rate of 5% SDLT on any value between £300,001 to £500,000 as a first-time buyer if your property exceeds £300,000.

If you’re planning on applying for a mortgage to buy your first home, you may want to check your Equifax Credit Report & Score beforehand. Free for the first 30 days then £7.95 monthly, the credit report shows you your borrowing history, while the score gives you an indication of how creditworthy a lender may find you.

This article was written on 22 September 2020; all information was correct at the time of writing.

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