Last week, following on from the budget, there was much in the press about the change in stamp duty land tax and how many first time buyers were going to get relief from this. However, there are also many first time buyers who will be disappointed not to get the benefit of this budget change. In this week’s blog we look at the rules.
On 22nd November 2017, in the budget the Chancellor of the Exchequer announced a relief from stamp duty land tax for first time buyers in an attempt to help stimulate the housing market, but who can claim this relief and which first time buyers are going to be disappointed?
Looking at the guidance issued by HMRC on the day of the budget, to qualify for stamp duty land tax relief the following conditions need to apply:-
1. The purchase has to be of a single dwelling.
2. The purchase price of such dwelling has to be £500,000 or less.
3. The purchaser, or if there is more than one, each of them has to be an individual and a first time buyer who intends to occupy the dwelling as their only or main dwelling.
4. The transaction has to complete on or after 22nd November 2017.
5. The transaction must not be linked to any other land transaction other than transaction for land which forms part of garden or grounds to the dwelling or land that subsists for the benefit of either the dwelling or its garden or grounds.
The relief where it can be claimed means there is no stamp duty land tax on the first £300,000 of the purchase price and 5% on the next £200,000.
This means that whilst many first time buyers can claim this relief, and will be delighted to be making a considerable saving, the following will not be able to claim:-
1. Anyone completing the purchase of their first home on 21st November 2017 or before.
2. Anyone buying their first home with someone who has owned property before even if this has been sold.
3. Anyone who has inherited a property or share in a property even if such property has been sold.
4. Two first time buyers where only one intends to live in the property.
5. Someone whose parents bought a property for them to live in while a student but the property was in the name of the student.
6. A first time buyer buying a holiday home which will not be their main residence.
7. A first time buyer buying a commercial property or a mixed use property such as a shop with living accommodation.
The following however can claim the relief:-
1. A first time buyer who bought on 22nd November 2017 before the Chancellor made his announcement.
2. A first time buyer who is a trustee of another property provided they are not also a beneficiary of such trust.
3. A 65 year old first time buyer – there is no age limit.
4. Someone whose parents bought a property for them to live but the property remained in the names of the parents only.
5. A first time buyer who purchases a property as their main residence but does not move in immediately. The relief will not apply though if they intend to continue to live in rented accommodation indefinitely. This will be a question of fact but we will need to wait and see examples of how this is tested.
It is clear therefore, that whist there were many thinking about, or in the process of, buying their first home who were cheering last Wednesday afternoon and indeed we as a firm completed many purchases on Friday where the buyers were no longer liable for stamp duty land tax there were also many cases of people who thought they would be free of stamp duty land tax but who discovered due to their or their fellow purchasers past ownership that they still had a liability. This is something that as legal advisers we will need to take great care with and will need to make sure all the necessary questions are asked to determine a purchasers liability.
Anyone considering a property purchase where they think they might qualify for stamp duty land tax relief is advised to take legal or accountancy advice on their personal circumstances.
