Stamp Duty Land Tax (“SDLT”) is normally paid on any purchase of residential property valued over £125,000. If the new property being purchased is a second property, then SDLT is paid on the whole value at an enhanced rate.
First Time Buyer’s Relief (“FTBR”) is available for buyers who satisfy four conditions for purchases completed on or after the 22 November 2017:
1: FTBR is only available for the purchase of “a major interest in a single dwelling”. A single dwelling includes a self-contained part of a building if each of the residents live independently from each other, including having access to independent access and domestic facilities. FTBR is available for both leasehold and freehold interests.
2: The transaction must be for not more than £500,000, including linked transactions (see below), but if the linked transactions total more than £500,000 then none of the transactions qualify for FTBR. The SDLT rates applying to FTBR are:
On the first £300,000 0%
On the amount above £300,000 to £500,000 5%
3: All the individuals buying the property must intend to occupy the property as a main residence. Companies purchasing residential property cannot claim FTBR. All the purchasers must be first time buyers, that is a purchaser who has not acquired a major interest in a dwelling to the equivalent anywhere in the world. A purchaser who is a trustee may claim FTBR as long as they are not also a trust beneficiary. All the purchasers in a transaction must be first time buyers to claim FTBR.
4: In a transaction where the purchase of the dwelling is linked to another transaction, FTBR is only available if the other transaction is to purchase a garden or grounds, or an interest or rights over land which are solely obtained to benefit the dwelling, for example a right of way. To be a linked transaction, there must be an arrangement or series of transactions with the same vendor and purchaser or persons connected with them in either case.
First Time Buyers’ Relief is claimed in the SDLT land transaction return, usually submitted after completion of the purchase.
If you wish to purchase a property and think you qualify as a first time buyer, please do not hesitate to contact Tracey Freeman in our Residential Property Department.