2nd December 2011
The Chancellor of the Exchequer has announced in his November 2011 pre-budget report that the relief from paying Stamp Duty Land Tax (SDLT) for first time buyers of residential property with a purchase value of £250,000 or less will cease to apply as of 24 March 2012. As the 24th March 2012 is a Saturday and property transactions usually complete on a Friday the last day that buyers will benefit would be if they complete a purchase by Friday 23 March 2011.
After 23 March 2012 all first time buyers of residential property with a purchase price of £125,001 will have to pay SDLT at the standard rates as prescribed from time to time. For example, if a property purchase is completed, with a value between £125,001 and £250,000, after this date, then the buyers will have to pay SDLT at the rate of 1% of the purchase price between £1,500 and £2,500 of SDLT on completion of the purchase. The higher rates of SDLT payable for property purchases of £250,001 and over will remain and, in any event, first time buyers have no relief from paying SDLT for properties purchased with a value of £250,001 or over.
Many first time buyers who are currently considering buying a property should therefore bear in mind the saving they can make on SDLT if they complete the purchase by 23 March 2012. However, if you are a first time buyer and you are still in the early stages of planning you will need to act quickly if you wish to secure the property you want and to arrange the necessary finance in time in order to benefit from the SDLT relief before it ceases. It is important to note that this deadline is the date of legal completion when all purchase monies, including any coming from a lender, are handed over. Therefore, it is not the date that a sale is agreed, subject to contract, either privately or through an estate agent for example.
First time buyers need to be aware that finding the property and getting in place the finance can take longer than they think and you should be taking steps to get the finance agreed in principal with a lender very shortly if you wish to complete a purchase before the deadline and benefit from the relief. It is also worth bearing in mind that some commentators think this may cause an increase in first time buyer transactions leading up to 24 March 2011. If this were to be right then there might be stronger competition for properties in the New Year.
If you have any queries about any of these issues one of the members of our conveyancing team would be happy to discuss them with you.