The October budget introduced a correction to the previous year where first time buyers of shared-ownership properties seemed to be forgotten about. When the first time buyers’ exemption was introduced in last year’s budget, this did not stretch to situations where only a percentage of the property was purchased. This was leaving shared-ownership buyers with stamp duty bills of up to £10,000.00 for properties valued at £500,000.00, despite only paying £125,000.00 for a 25% share. This has now been changed by cutting stamp duty for first time buyers of shared-ownership with a market value up to £500,000.00.
Although stamp duty was abolished for first time buyers of properties priced up to £300,000.00 in 2017, buyers only purchasing a share of the property had to elect to be taxed on the full market value of the home rather than the share that they were buying. Alternatively, they would be able to use their first time buyer exemption on the first share that they were purchasing, but this would leave them liable to pay stamp duty when further shares were bought, despite all payments potentially being less than £300,000.00.
It has now been agreed that shared-ownership should have been included with the initial first time buyers’ exemption introduced in November 2017. Therefore it is to be backdated to this date, enabling any eligible shared-ownership purchaser to benefit from the initial exemption up to the market value of £500,000.00.
This is a welcome change which widens the opportunities for first time buyers. The fact that it has been implemented retrospectively means that those who have purchased since the last budget can recoup any stamp duty paid, putting right the initial wrong. This move will hopefully trigger an extra boost to the market and make it easier to get on to the property ladder for more people moving forward.
Ruth Beeton, Solicitor, Residential Conveyancing
If you would like to speak to someone about stamp duty, please call the residential conveyancing department on 01642 356500/0191 2322574.