FINANCE
such as carpets, blinds or furniture, make sure that your solicitor itemises these separately so they don’t form part of the Stamp Duty calculation. If you have found your dream home, but won’t be able to complete in time, then you could try negotiating a discount, or ask a mortgage broker to find a sympathetic lender, as it might be possible to use part of your deposit towards the Stamp Duty and take a higher loan-to-value mortgage, or in some cases you might be able to add the Stamp Duty to your mortgage loan, although this will work out expensive in the long term. Another change to Stamp Duty was an increase in the surcharge for those who already own a property, from 3% to 5%. It’s a measure designed to discourage second home purchase and buy-to-let, so it could depress house prices to the benefit of first time buyers. There are circumstances, however, in which it can catch people out. For example, if a buyer, or their partner, already owns a home, or a share in an inherited home or part of a property from a previous relationship (even if they don’t live there), they will have to pay the surcharge up front, although they can claim it back if they sell the previously owned property within three years. However, it means having a lot of extra cash in hand – from April, a £500,000 house that counts as a second home means a tax of £40,000 instead of £10,000 as a first time buyer or £15,000 as a standard buyer. The surcharge will also apply to someone buying with a parent who owns a
So, is there anything that first time buyers can do in mitigation? Firstly, if you will be badly affected by the changes, you could consider if it is possible to complete your purchase before the deadline. The legal process of conveyancing takes, on average, between eight and 16 weeks, so unless you have already started, that ship may have sailed, especially for a more complex leasehold purchase. If you are a first time buyer purchasing a freehold new build or chain-free property, it might still be possible, but delays can occur with even the simplest transactions, so you will need a back-up plan to find the additional funds if anything goes wrong. Another option would be to look for a home below the threshold – even in London, a recent search on Zoopla revealed just over 5,000 properties below £300,000 that would be SDLT-free for first time buyers. If you don’t qualify for legal FTB status, you’ll need to look further from the city to escape Stamp Duty – more than 12,000 homes under £125,000 are available, but mainly in the North, with pleasant one bedroom apartments in Nottingham and even a three bedroom end-terrace in Seaham, County Durham, coming in at under the threshold.You could also consider shared ownership, where you have the option to pay Stamp Duty on only the portion you are buying, and no further SDLT is due unless you staircase to 80%. Provided your initial share costs less than £125,000, there will be no Stamp Duty to pay. If the changes to
EXPERT COMMENT
The Autumn Budget was a missed opportunity to stimulate the UK’s housing market. Measures such as the 2% increase in the second home surcharge and future Stamp Duty reforms for rst time buyers by the Government, will drastically hinder affordability. The decision from the Government to lower Stamp Duty bands shows a concerning de cit of joined-up thinking. Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for rst time buyers and freeze up working capital for developers – which can only be available if these homes are selling? I expect Stamp Duty receipts to fall signi cantly, then to atline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing Stamp Duty thresholds means that it will ultimately be the consumers who foot the bill. Furthermore, it would make sense for the new Government to suspend, or even abolish, the additional homes surcharge where properties are being acquired for private rental sector investment. Removing this measure would encourage landlords to increase their holdings, rather than exit the market – reversing the decline in supply of rental homes and potentially expand it to the point where demand no longer outstrips supply.
Stamp Duty mean you will need to pay it (or pay more), bear in mind that you can neither avoid, nor delay paying. While officially the buyer must pay SDLT within
home, if the parent’s name will be on the deeds. Labour promised in its election
manifesto “to support first time buyers who struggle to save for a large deposit”, but
14 days of buying a home, in almost all circumstances your solicitor or conveyancer will
Jonathan Stinton is not convinced, “Paying thousands
in Stamp Duty could easily disincentivise any would-be buyers and keep people from moving up and down the ladder as freely as they would like.”
require the money before completion. The amount of Stamp Duty is based on the price of the building and fixed items like kitchens, but if you are buying extras
David Hannah, Group Chairman, Cornerstone Tax
First Time Buyer February/March 2025 91
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