First-time Buyers Urged to Make the Most of ‘Forgotten Tax Relief’
First-time buyers have been urged to make the most of a ‘forgotten tax relief’ that could save them thousands of pounds as the stamp duty holiday ends.
While the stamp duty holiday finished at the end of the month, many have forgotten that an even better tax relief is still available for first-time buyers, according to a leading property lawyer.
The first-time buyer stamp duty exempts buyers if they purchase properties for less than £300,000.
Simon Nosworthy, head of residential conveyancing at Osbornes Law, said: “In the chaos of the stamp duty holiday most people seem to have forgotten that there is a fantastic stamp duty exemption for first-time buyers. The exemption is actually better than the last part of the stamp duty holiday as the latter only allowed for £250,000 tax free. While many may be bemoaning the end of the holiday, for first time buyers the holiday effectively isn’t over as they still have the chance to buy a property without paying stamp duty.”
The first-time buyer stamp duty exemption was introduced in November 2017 and made first time buyers in England, Northern Ireland and Scotland exempt from paying the duty on properties purchased up to a value of £300,000. This means first-time buyers can save up to £5,000.
For properties costing up to £500,000, they pay no stamp duty on the first £300,000, and pay the duty on the remaining amount up to £200,000. If first-time buyers purchase a property worth in excess of £500,000 they do not qualify for any of the exemption and have to pay the full duty.
With the end of the stamp duty holiday many would-be home buyers may be waiting to see if the market drops, but Nosworthy said a dip in prices is unlikely.
He added: “While the stamp duty holiday definitely fuelled prices across the UK, I wouldn’t expect to see a drop in prices once the holiday ends. There are a number of reasons I would expect prices to continue increasing including people wanting more space because of being stuck at home during the pandemic and because of the move towards home working. Interest rates are extremely low, which makes borrowing cheap and there isn’t enough housing coming onto the market. As a result, if you wait for a drop in house prices for too long you could end up paying a lot more for a property.”
He concluded: “With inflation rates predicted to rise to almost 4 per cent next year it seems likely that interest rates will go up. This will have a cooling effect on the housing market, but whether or not this will cause a dip in prices will remain to be seen.”