Stamp duty exemption for first-time buyers of shared ownership properties

In Monday’s Budget, Chancellor Philip Hammond announced plans to cut stamp duty for first-time buyers of shared ownership properties worth up to £500,000. The Chancellor also moved to implement a retrospective claw-back for those who have paid the tax charge since the last Budget in November 2017.

Until this recent announcement, first-time buyers in England did not have to pay stamp duty on the first £300,000 of a property worth up to £500,000. They would then pay 5% stamp duty on the value between £300,000 and £500,000. The new tax break is extended to first-time buyers with shared ownership who previously could not benefit.

Before, to qualify for the stamp duty exemption (given in 2017 to first-time buyers of homes priced up to £300,000) buyers of a shared-ownership property had to elect to be taxed on the full market value of the home (up to £500,000) rather than only the share they were buying.

If the full market value of the shared-ownership property was more than £500,000, the buyer would not have been eligible for any stamp duty reduction at all.

So, a buyer paying £125,000 for a 25 per cent share of a new home valued at £500,000 would still have had to pay £10,000 stamp duty – equivalent to five per cent of the sales price above £300,000.

Our thoughts

Through our experience, one of the most satisfying aspects has always been to help first-time buyers into their new homes. However, one of the biggest hurdles in this process is finding deposits which are required by mortgage lenders. When combined with other fees (including stamp duty) it means for many first-time buyers, unfortunately getting onto the property ladder is out of reach.

Shared ownership is therefore a great way for younger people to get onto the property ladder and we feel this latest news is very welcome – as it means first-time buyers can save thousands of pounds, which of course can be put towards their saving for a deposit.