Stamp duty cuts to aid first-time UK home buyers
First-time UK property buyers spending up to £500,000 will only be charged on a portion of their purchase over a new threshold of £300,000.
In a bid to assist young property buyers to get onto the property ladder in the expensive British property market, the government has announced the abolition of stamp duty for properties up to £300,000 for first-time buyers who are planning to live in their purchased home. The announcement is part of the new budget, and will come into effect immediately.
Previously, buyers paid tax on all property purchases over £125,000. The measure will save 80 percent of first-time buyers up to £5000.
Raft of new measures announced
The cut is amongst a number of measures aiming to see more homes built and reverse a recent decline of home ownership. Other measures include higher council tax on empty homes, £44 billion of loans and guarantees to boost the housing supply to 300,000 new homes each year - almost 100,000 more than last year - and development of city centres and transport infrastructure.
The government had been under pressure to change the way stamp duty worked, with critics saying it has been hampering first-time buyers, who need to save for longer amidst rising prices, as well as existing home owners who are choosing not to move home to avoid the tax.
The move will affect government coffers: more than £8bn stamp duty was collected in 2016, almost double the 2012 figure thanks to rising prices. It’s thought the tax break will cost the Treasury more than £3bn over the next five years.
Research shows that with London property, 5.3 percent of homes can now be bought tax free - compared with 0.3 percent before the change. If first-time buyers spend between £300,000 and £500,000 they will pay 5 percent on anything over the threshold. This means buying a £500,000 home will incur £10,000 in stamp duty, £5000 less than before.
Chancellor Phillip Hammond said the move is to address a fall in number of younger buyers purchasing first homes. “Put simply, successive governments over decades have failed to build enough homes to deliver the home-owning dream that this country has always been proud of.”