FIRST-TIME buyers who missed out on the full stamp duty relief can actually still purchase a home worth up to £300,000 without paying the tax.
That’s because first-time buyers have been able to benefit from a land tax holiday since 2017.
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In July 2020, the Chancellor temporarily scrapped the levy on homes worth up to £500,000 – up from the usual £125,000 – in a bid to stimulate the housing market.
It was due to end in March this year but the deadline was extended until September, with the promise the support would be tapered from July.
It means that from now until October any purchases under £250,00 will be tax free before the relief is returned to its normal rate.
But first-time buyers will still able to cash in on a tax break even now the rate has been reduced or after it ends, thanks to a separate rule introduced by former Chancellor Philip Hammond.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8 2020, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government’s mini-Budget in July 2020.
The Chancellor extended the help until September 2021 in his Spring Budget.
The holiday has now been reduced to £250,000 as of the beginning of July 2021.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you’re a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
There’s no deadline on the first-time buyer tax relief either so you don’t need to fret about any looming deadlines, as long as the property is worth under £300,000.
Buyers with a 10% deposit can expect to pay around £1,144 a month in mortgage repayments on a property worth the limit, according to Zoopla’s mortgage calculator.
That’s based on a 25-year fixed-rate deal at 2% interest.
There are other factors that can affect your mortgage payments too, including your credit history, how much you earn and your other outgoings.
Here are eight properties around the UK that first-time buyers won’t need to pay stamp duty on:
Three bed semi-detached house, Manchester – £220,000
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This three-bed semi detached house is situated in a quiet cul de sac in Manchester.
It’s got excellent transport links into the city as well as Salford Quays and Media City too, as the nearest train station is only 0.8 miles away.
There are two double bedrooms that are fitted with wardrobes, a single bedroom too plus a main family bathroom.
The house also has a front and rear garden as well.
Two bed terraced house, Lancaster – £175,000
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This two-bed mid terrace home in Lancaster has a lot of character inside.
The master bedroom even has access to a mezzanine if you’re after a slightly quirkier layout.
The only downside is that the rear garden needs some attention, if you were to move in, but it is a great size if that’s an important factor for you.
There is on street parking too, but you won’t have to purchase a permit for a space – that can sometimes mean it is limited to first come- first serve though.
Two bed semi-detached house, Birmingham – £220,000
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You can buy a two-bedroom semi-detached home in Birmingham within budget, and it was only built in 2017.
The house overlooks an open nature reserve.
There’s a driveway too providing off road parking which can be very important to a lot of home-owners.
Plus there is even a separate guest bathroom in the downstairs’ hallway, so you’ll be able to keep friends away from the first floor family bathroom when they come over to visit.
Three bed terraced house, Wales – £200,000
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This three-bed terraced house is situated in a town centre location in Wales, so you’ll be close to any transport or local shops.
The house benefits from a recently renovated and new kitchen and bathroom so the cheap price means you’ll get lots of fresh amenities.
There are three double bedrooms and a modern bathroom with shower.
Everything outside has been recently repainted and there’s a low maintenance forecourt.
The patio has established shrubs already so you’ll be able to enjoy a nice outdoor space, plus there is an outhouse and large storage shed too.
Two bed terraced house, Kent – £280,000
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This end of terrace house has two bedrooms and it’s situated in Kent.
It has a large, newly fitted kitchen and diner perfect for family meals or inviting friends over for a dinner party.
There is even a summer house in the rear garden which you could use for storage or open up as another space for relaxing in the warmer months.
As this property is over the £250,000 threshold, you will have to pay the tax on the difference if you’re not a first-time buyer.
Three bed semi-detached house, Sunderland – £90,000
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You can purchase this three-bedroom semi detached property in the established residential area of Ryhope in Sunderland.
This one is in need of quite a bit of updating and work though.
You will likely have to re-do all the carpets, as well as the wallpaper and spend a bit of time on things like the bathroom too.
Even though the property is very cheap at only £90,000 for the free hold, you’ll have to factor in the extra costs that will be introduced in getting the property up to scratch.
It does have a large conservatory at the back leading off the lounge though, which lets in lots of natural light and provides another room for relaxing or socialising.
Two bed terraced house, Exeter – £249,950
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In Exeter you can purchase a two-bedroom house, that’s only a few years old and still in fantastic condition for just under £250,000.
If you’re not a first time buyer it’s still eligible under the stamp duty holiday so you’ll be able to save on tax.
The house has french doors leading to a good sized garden that’s part paved and part grass area.
There’s also two allocated parking spaces that come with the property.
Three bed semi-detached house, Newcastle – £150,000
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The three-bedroom semi-detached family home on Fern Drive that you can buy for only £150,000 is brand new to sales market.
It has a large open plan living dining room with a feature log burner and herringbone flooring.
Outside, there’s ample off-street parking on the paved driveway and the south facing garden to the rear has larger decked area, as well as a patio space and shed perfect for storage.
Use our stamp duty holiday calculator to work out how much you could save with the scheme if you’re not a first-time buyer.
Some first-time buyers are able to get on the property ladder with just a 5% deposit though.
Plus we have a guide to buying your first home, including how much you can borrow and the help available.
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