Budget 2017: stamp duty abolished for first-time buyers on homes priced up to £300k

New stamp duty rules for first-time buyers are effective immediately, and will reduce the property tax for 95 per cent of first-time buyers.
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Stamp duty will be abolished for all first-time buyer property purchases up to £300,000, with effect from today, announced Chancellor Philip Hammond in his Budget.

It was a highly anticipated move that equates to a £5,000 saving on the average price of a London first home and will come as a small relief to those struggling to save up for deposits and stamp duty.

​"The dream of home ownership will become a reality in this country once again," said Hammond in his speech to MPs in the Commons.

"One of the biggest challenges facing young first-time buyers is the cash required upfront."

The Treasury calculate this will reduce property tax for 95 per cent of first-time buyers, and means that 80 per cent of first-time buyers will pay no stamp duty at all.

Stamp duty relief will also be available on the first £300,000 of the purchase price of properties up to £500,000, to reduce the costs for first-time buyers in high-price areas, such as London.

The portion of the house price between £300,000 and the £500,000 price ceiling will be taxed at five per cent.

With the average first-time buyer home in the capital now costing £479,000, according to Savills, this cuts the stamp duty bill from £13,950 to £8,950.

"This is definitely a case of ‘every little helps’. It isn’t possible to borrow against stamp duty, so this will temper some of the pressure on first time buyers at the time of completion, but does not impact the real challenge – that of the deposit requirement, particularly in higher value markets," said Lucian Cook, Savills head of residential research.

"This may just encourage the bank of mum and dad to help out more, safe in the knowledge that their cash is not going to the Treasury.

"Against an average first-time buyer deposit of £25,652 across the UK, the maximum £5,000 saving on stamp duty looks significant, but against the average £99,753 deposit requirement in London it is far less so."

What exactly is stamp duty?

Stamp Duty Land Tax (SDLT) is the tax buyers pay when purchasing a property.

The full amount has to be paid within 30 days of completing the purchase and buyers are not allowed to add the bill to their mortgage and pay it off in increments.

What are current stamp duty rates for non-first time buyers?

Band SDLT rates 2017
£0 - £125k 3%
£125k -£250k 5%
£250k - £925k    8%
£925k -£1.5m 13%
£1.5m+ 15%