The Finance Bill 2010 introduced relief from Stamp Duty Land Tax ("SDLT") for purchasers of residential property up to £250,000 where the purchasers are all first time buyers.
The aim of the relief is to assist first time buyers who are finding it increasingly difficult to get on the property ladder. At the beginning of the year it was reported that only one in four buyers planning to buy this year were first time buyers, quite a dramatic decrease in the usual numbers. First time buyers are important in a conveyancing chain and help to keep the market moving. Despite the fall in house prices, first time buyers are still finding it difficult to produce the increased deposits required by lenders.
Currently the rate of SDLT is for transactions over £125,000 to £250,000 is 1%, 3% over £250,000 to £500,000, and then 4% for those over £500,000.
The relief means a saving of up to £2,500 for first time buyers and, according to the Chancellor, will mean that 9 out of 10 people buying their first home will not be liable for tax.
Who qualifies as a first time buyer?
A first time buyer for the purposes of SDLT relief is someone who has not owned property in the UK or the equivalent elsewhere in the world and who intends to occupy the property as their only or main residence. If there is more than one buyer, all buyers must satisfy the conditions to take advantage of the relief.
When is the relief available?
The relief is available for transactions that complete on or after the 25th March 2010 but before the 25th March 2012.
Is the relief available on shared ownership transactions?
The relief is only available if the market value election is made, this is quite a specialized area so you should contact one of our Property Team for further information.
When is the relief not available?
The relief is not available if you have owned an interest in a residential property in the UK or elsewhere in the world, this includes property that you might have inherited or that you may have owned jointly with a previous spouse or partner.
It is hoped that the relief will encourage and enable first time buyers to realise their ambition of getting on the property ladder, and whilst the Council of Mortgage Lenders report that Mortgage Lending has dropped slightly there are also reports that lenders are now offering more attractive products to borrowers.
If you are unsure of whether or not the SDLT relief applies to you or you want any further information about how to take advantage of the SDLT holiday please contact one of our Residential Property team on 01553 660033.
