What Is Stamp Duty For First-Time Buyers?

by | Tuesday 25th Jun 2024 | Mortgage Insights

What is stamp duty for first time buyers

Purchasing a property is going to be expensive. Unfortunately there is no sugar coating it! Most homebuyers understand that there will be associated costs with purchasing a property. But many don’t know what these costs are, or what they mean. One significant cost that first-time buyers need to be aware of is Stamp Duty Land Tax (SDLT). This blog will clarify exactly what stamp duty is, how much first-time buyers need to pay, and how the regulations have evolved over the years. We will also explore various key questions around this topic to help you become a stamp duty expert before you buy your new property!

Understanding Stamp Duty

So what is stamp duty? Stamp Duty Land Tax (SDLT) is a tax levied on property purchases in the UK. It applies to both residential and commercial properties. The tax is calculated based on the purchase price of the property and is paid by the buyer. The primary purpose of stamp duty is to generate revenue for the government, which can be used for various public services. That is basically it in a nutshell. Use our handy stamp duty calculator to work out how much stamp duty you could pay.

Stamp Duty: Current Rules

For non first-time buyers, stamp duty is applied earlier. However, it is only applied if you are purchasing a residential property at over £250,000. Anything below this, and you will not have to pay stamp duty. The amount you pay depends on:

  1. When you bought the property
  2. How much you paid for it
  3. Whether you’re eligible for relief or an exemption

Rates For A Single Property

You pay stamp duty at these rates if, after buying the property, it is the only residential property you own. You usually pay 3% on top of these rates if you own another residential property.

Stamp duty chart

Stamp duty chart (Source: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates)

How Much Is Stamp Duty For First-Time Buyer?

As of now, first-time buyers enjoy certain benefits when it comes to paying stamp duty. Here are the key details:

  • No Stamp Duty on Properties up to £425,000: If you are a first-time buyer purchasing a property worth up to £425,000, you will pay no stamp duty.
  • Reduced Stamp Duty on Properties up to £625,000: For properties priced between £425,001 and £625,000, you will pay no stamp duty on the first £425,000. However, a 5% stamp duty rate applies to the remaining amount up to £200,000.

Examples of Stamp Duty Calculations For First-Time Buyers

Property Price: £300,000

  • Stamp Duty: £0 (since the property price is below £425,000)

Property Price: £500,000

  • First £425,000: £0 Stamp Duty
  • Remaining £75,000: 5% Stamp Duty
  • Total Stamp Duty: £75,000 x 0.05 = £3,750

Property Price: £625,000

  • First £425,000: £0 Stamp Duty
  • Remaining £200,000: 5% Stamp Duty
  • Total Stamp Duty: £200,000 x 0.05 = £10,000

Historical Changes to Stamp Duty for First-Time Buyers

Over the years, the rules and rates for stamp duty have undergone several changes. These changes are often influenced by economic conditions, government policies, and efforts to support first-time buyers.

  • How Much Is Stamp Duty Before 2017: First-time buyers had no specific relief and were subject to the same stamp duty rates as other buyers.
  • How Much Is Stamp Duty 2017: The UK government introduced a relief for first-time buyers, exempting them from stamp duty on properties up to £300,000 and offering reduced rates for properties up to £500,000.
  • How Much Is Stamp Duty 2021: The threshold was temporarily increased during the pandemic to stimulate the housing market, with significant reliefs and holidays introduced.
  • How Much Is Stamp Duty 2024: The relief was adjusted to the current thresholds of £425,000 and £625,000 as part of ongoing efforts to make homeownership more accessible.

Key Questions Around Stamp Duty For First-Time Buyers

Do first time buyers pay any stamp duty

What is the Stamp Duty for First-Time Buyers?

Stamp duty for first-time buyers is a tax on property purchases. The rates and thresholds are designed to ease the financial burden on first-time buyers. What is the stamp duty threshold for first-time buyers? As mentioned earlier, if you are a first-time buyer purchasing a property worth up to £425,000, you will pay no stamp duty.

When Do First-Time Buyers Pay Stamp Duty?

Stamp duty is payable upon completion of the property purchase. Buyers must file a return to HM Revenue and Customs (HMRC) and pay the tax within 14 days of completing the purchase.

When Does First-Time Buyer Stamp Duty Relief End?

Currently, there is no specified end date for the stamp duty relief available to first-time buyers. The relief is part of ongoing government policy and subject to change based on future budgets and economic conditions.

What is a First-Time Buyer for Stamp Duty Purposes?

A first-time buyer is someone who has never owned a property before, either in the UK or abroad. This status is essential to qualify for the stamp duty relief.

Who Qualifies For First-Time Buyer Stamp Duty?

To qualify, you must never have owned a residential property before and the property must be intended as your main residence.

Why Do First-Time Buyers Have To Pay Stamp Duty?

Stamp duty is a significant revenue stream for the government, funding various public services. However, recognising the challenges first-time buyers face, the government has implemented reliefs and exemptions to reduce the financial burden and encourage homeownership.

Stamp Duty When One Is A First-Time Buyer

A common question that we as mortgage brokers get asked a lot is “Do I still need to pay stamp duty if the person I am buying with is a first-time buyer?”. Some people may be purchasing a new residential property with a partner, friend, family member where one is a first time buyer and the other has owned a property before. Unfortunately if you are buying a residential property on a standard mortgage product and either of you have ever owned a property, you will need to pay stamp duty. However, if you are using a scheme such as a guarantor mortgage or a joint borrower sole proprietor mortgage, you may be eligible to avoid stamp duty as long as the person living in the property is a firs-time buyer.

UK House Prices And Stamp Duty

Understanding stamp duty and its implications is crucial for first-time buyers. The current regulations offer significant relief, making it more affordable to step onto the property ladder. If you’re considering purchasing your first home, it’s essential to be aware of how much stamp duty you may need to pay and when it is due. Depending on the size and value of the property that you are buying, you may be liable to stamp duty. If you are buying a property in London, the chances are that the value of the property will be much higher than other areas of the country. In places like South West London, the price of a flat is around £500 – £700K meaning that if you are buying as a first-time buyer in areas like Putney (where we are based), you may be liable to stamp duty of between £3,750 and £22,500 depending on the price of the property.

Speak To A First-Time Buyer Mortgage Broker

At Oportfolio Mortgages, we specialise in helping first-time buyers secure the best mortgage deals and also providing first-time buyers will everything they need to know about buying their first home. Our experts are here to guide you through the process, ensuring you take full advantage of the available stamp duty reliefs, and are completely clued up on what you can and can’t do as a first home buyer. Contact us today to discuss your mortgage options and take the first step towards owning your dream home.

We're Here to Help

If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

As featured in

Understanding a Volatile Mortgage Market eBook

Download Our eBook

Join our mailing list and receive a link to our latest ebook, Understanding a Volatile Mortgage Market. 23 pages of practical insights to navigate the unpredictable mortgage landscape.

You Will Receive A Link To Your eBook Shortly!