What is first time buyer stamp duty?
First time buyer stamp duty is the SDLT you may need to pay when you buy a residential property in England or Northern Ireland, with a special relief available if you qualify as a first-time buyer.
Do first-time buyers pay stamp duty in England and Northern Ireland?
Sometimes, but many first-time buyers pay no stamp duty at all.
If you qualify for first time buyer stamp duty relief, you’ll pay:
- 0% SDLT on homes up to £300,000
- 5% SDLT on the portion from £300,001 to £500,000
If the price is over £500,000, the relief does not apply and standard SDLT rules apply.
What are the standard stamp duty rates if you do not qualify for first time buyer relief?
If you are not eligible for first-time buyer relief, standard SDLT typically starts once the purchase price goes above £125,000 (for buyers purchasing their only home).
Other rates can apply in certain situations, for example if you already own another property or you are buying a buy-to-let.
How do you calculate first time buyer stamp duty?
Stamp duty is calculated in bands, so you only pay the rate on the portion of the price within each band.
Example: buying at £325,000 as a first-time buyer
- 0% on the first £300,000 = £0
- 5% on the remaining £25,000 = £1,250
That’s the total first time buyer stamp duty due: £1,250.
Who qualifies as a first-time buyer for stamp duty relief?
You generally qualify if you have never owned a residential property anywhere in the world and you intend to live in the home as your main residence.
This is where people often get caught out. For example, owning a property in the past through inheritance or a gift can mean you are not treated as a first-time buyer for SDLT relief.
What happens if you’re buying with someone who is not a first-time buyer?
If you’re buying together, every buyer must meet the first-time buyer criteria to claim the relief. If one buyer has owned property before, you will usually lose the first time buyer stamp duty relief and the purchase will be assessed under the standard SDLT rules.
When do you pay stamp duty and who sorts it out?
Any SDLT return and payment is due within 14 days of the effective date, which is usually completion. Your solicitor or conveyancer will typically deal with the SDLT return and payment as part of the conveyancing process.
Is first time buyer stamp duty different in Wales and Scotland?
Yes, Wales and Scotland use different property transaction taxes.
Wales uses Land Transaction Tax (LTT) and there is no first-time buyers’ relief.
Scotland uses Land and Buildings Transaction Tax (LBTT). If eligible, first-time buyers generally pay no LBTT on the first £175,000 of the purchase price.
What other costs should first-time buyers budget for alongside stamp duty?
Even if your first time buyer stamp duty bill is £0, it’s worth planning for the other typical moving costs, such as surveys, removals, searches, Land Registry fees and mortgage-related costs.
If you’re buying a flat, you may also have extra legal checks because it is leasehold. This guide may help: Need to Know: Buying a Leasehold Property.
How can John Fowlers help with your first purchase?
First time buyer stamp duty is just one piece of the puzzle. We help first-time buyers understand what applies to them, keep the transaction moving, and handle the SDLT process correctly as part of the conveyancing work.