The latest Budget delivered a headline grabbing abolition of stamp duty land tax (SDLT) for first-time buyers on homes worth up to £300,000 and an SDLT exemption on the first £300,000 of properties worth up to £500,000.
But how much will a first-time buyer actually save and is it likely to make home ownership achievable for first-time buyers?
A first-time buyer is now exempt from paying any SDLT on the purchase of a £300,000 property, giving a first-time buyer a saving of £5,000 in comparison to the pre-Budget position.
For those first-time buyers looking to purchase in London and much of the South-East of England, house prices are likely to be above the £300,000 Budget threshold. On a £500,000 property, a first-time buyer will still incur a £10,000 SDLT liability. This is a saving of £5,000 on the pre-Budget position but SDLT remains a significant liability for first-time buyers above the £300,000 threshold.
Whilst, the SDLT exemption means 80% of first-time buyers would not pay any stamp duty and 95% would see their tax bill cut significantly, it will only ever benefit those who will already be fortunate enough to have access to a large deposit. For those stuck in ‘generation rent’ who struggle to save any capital, the saving on stamp duty does not address the main barrier to first-time home ownership.