Stamp Duty abolished in Budget 2018 for all first-time buyers of shared ownership properties up to £500,000

Chancellor Philip Hammond announced plans to correct an anomaly from his previous Budget by cutting stamp duty for first-time buyers of shared ownership properties worth up to £500,000.

Previously, 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.

Alternatively, buyers could elect to use their first-time buyer exemption on the first share of the property they bought, but would have had to pay full rate stamp duty on all further shares they bought, regardless if the sum of all payments was less than £300,000.

Now, these buyers will be exempt from this tax, which has also been implemented retrospectively for any shared-ownership buyers since the first-time buyer exemption was introduced in November 2017.

“By their nature, first-time buyers purchasing shared-ownership homes are struggling to take that all important first step onto the housing ladder. Making shared-ownership home buyers – who are only buying a share of the property – eligible for the first time buyer stamp duty exemption is a welcome move and makes complete sense,” said Paula Higgins, chief executive, HomeOwners Alliance.

“The fact Mr Hammond has promised to apply this retrospectively and put right the wrong for all those shared-ownership scheme home buyers since the last Budget is again great to see.”

However, many commenters were dismayed that other stamp duty rates, which many blame for the stagnating property market, were ignored in the Budget 2018.

Property investment firm London Central Portfolio attributed a 34.8 per cent fall in transactions to increased property taxes for homes costing more than £937,000 and for second home purchases, as well as cuts to tax relief for buy-to-let landlords.

But the Chancellor opted to keep current levels where they are.

“In failing to address Stamp Duty for a fourth consecutive year, the Chancellor has missed another opportunity to inject much needed momentum into the market. As the primary hurdle facing residential property, Stamp Duty fees over the £937,500 threshold coupled with the three per cent levy on second or multiple home purchases are grinding the market to a halt," said Rory O’Neill, head of residential at estate agent Carter Jonas.

“It should go without saying that no echelon of the market operates in isolation, and penalties at the top end will always filter down the ladder.

"While the number of first-time buyers has reached an 11 year high, at present, the market is so congested in the middle that it has reached an impasse."