Do You Qualify For The Government’s Break On Stamp Duty For First-time Buyers?

When the new budget was announced last month, potential first-time buyers became some of the biggest winners with the announcement that they won’t have to pay any stamp duty on properties priced up to £250,000. This will be a big boost to first-time buyers as stamp duty is often the largest add on cost when it comes to buying a home. This break of up to £2,500 is quite a significant saving but who exactly do the Government consider a first-time buyer?

According to the Government, 90 per cent of potential first-time buyers will qualify for the saving and not have to pay the tax. In general the scheme has been widely welcomed but many experts believe that administrating the scheme and making sure the discount goes exclusively to first-time buyers will be difficult. The Council of Mortgage Lenders stated that there is bound to be problems and advised just making all properties under the £250,000 limit exempt. Despite that advice the discount is exclusively for first time buyers and after making sense of HM Revenue & Customs’ rules, here’s our simplified version of who qualifies and answers to some other questions you may have.

The main rule you need to adhere to in order to qualify for the exemption is that you have never owned a property in England or even abroad. Also, if you are signing a joint mortgage with a partner then all the rules apply to both names on the lease so neither of you can ever have owned a property. If one of a couple is eligible then the property would have to be purchased solely in that person’s name. The scheme is very rigid and doesn’t offer the exemption to anyone that is not strictly a first time buyer, even if you inherited a property or were bought one by your parents then you wouldn’t qualify. On top of this the stamp duty relief only applies if the property that is being purchased is going to be the main residence of the applicant, this means it can’t be used for second homes or properties being bought to let.

The Government intend to Police this scheme strictly and anyone applying will have to fill out a stamp duty return form that will be checked by HM Revenue & Customs. Anyone found abusing the system will have to pay every penny of the stamp duty as well as being subject to a fine of up to £5000.

By: James Driffield

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Why not take advantage of the stamp duty exemption if you qualify and take a look at a fixed rate mortgage from Leeds Building Society.