How would stamp duty affect first time buyers in 2019?

2019 is a great year for first time buyers looking to get onto the property ladder. Thanks to changes that were introduced in the budget last year there is currently no stamp duty to pay – up to certain limits. Given the costs that are involved in buying a home this is welcome relief for many and may even give some first time buyers the financial incentive to make a move. But what does the stamp duty holiday actually mean and how might it benefit you this year?

How does stamp duty currently affect first time buyers?

Anyone looking to purchase a property that costs £300,000 or less won’t have to pay any stamp duty at all. This includes homes that are bought with a mortgage and those properties that are shared ownership. This is potentially a significant saving, as the normal threshold for stamp duty is £125,000 – without the stamp duty holiday for first time buyers in 2019 there would be tax to pay on any amount above £125,000. So, for example, on the purchase of a property worth £250,000 there would usually be £2,500 in stamp duty to pay. But, in 2019, a first time buyer would not have a bill at all.

 

What about properties worth more than £300,000?

In addition to a complete stamp duty holiday for properties worth £300,000 or less, the rate has been reduced for those properties worth up to £500,000. On the amount between £300,000 and £500,000 first time buyers currently pay just 5%. So, the purchase of a property worth £350,000 would usually generate a stamp duty bill of £7,500. However, under the current rules for a first time buyers this will be just £2,500.

Buying a property worth more than £500,000

There is no current exemption for first time buyers who are purchasing properties worth £500,000 or more. That applies whether or not the property is shared ownership. Instead, stamp duty will be applied to these purchases as it would normally – on any amount over £125,000.

 

Is it only first time buyers who benefit?

Yes, the changes have been specifically designed to support those who want to get onto the housing ladder for the first time. It means that buying a first home should cost less and be more affordable to a broader range of people. There are benefits in getting more people onto the property ladder, as others on the housing ladder will also be able to move. There are two key requirements for anyone who wants to take advantage of this discount:

  • You must not have held a freehold or leasehold interest in a dwelling before. In order to receive the discount everyone making the purchase must be a first time buyer – so if you’re buying jointly with parents, for example, you won’t be eligible
  • The property you’re purchasing must be a home i.e. it will be your only or your main residence


In 2019, stamp duty doesn’t have to be an obstacle for anyone looking to purchase a property worth less than £300,000.