By Over 180,000 first-time buyers have benefitted from Stamp Duty Land Tax relief according to official data released by HMRC. The data was released on the one-year anniversary since SDLT was introduced on 22nd November 2017.
The total amount saved by first-time buyers on Stamp Duty Land Tax through the recent money-saving tax relief named First Time Buyers Relief (FTBR), amounts to £426 million according to HMRC data.
FTBR allows eligible first-time buyers to access tax relief on Stamp Duty Land Tax (SDLT) when they purchase a new home. The tax relief can be used for purchasing a residential property up to the amount of £500,000 in England and Northern Ireland, so long as the first-time buyer doesn’t already own other properties and is intending on using the new property as their main residence.
The number of FTBR claims in the second and third quarter between July and September 2018, rose 12 per cent compared to the previous quarter, resulting in 58,000 transactions, according to HMRC data.
Financial Secretary to the Treasury, Mel Stride MP, commented on the recent HMRC data: “These statistics show that the government was right to offer a helping hand to first-time buyers. Without this investment, more than 180,500 homeowners may have struggled to get onto the property ladder. Maintaining the status quo was not an option.”
For those first-time buyers in Scotland and Wales, the STDL is devolved to their respective parliaments. There are significant differences between both the Scottish Help to Buy scheme and the Welsh Homebuy Scheme, which are separate money-saving initiatives rolled out by their prospective governments for first-time buyers.
For instance, in Scotland, the Help to Buy scheme is only available for new-build homes and the Welsh Homebuy Scheme is designed to help first-time buyers and those on lower incomes to receive assistance when buying a property.
First-time buyers mentioned in 2018 Autumn Budget
In the Autumn Budget 2018, Chancellor of the Exchequer, Philip Hammond, declared that the FTBR would be extended in England and Northern Ireland to also include Stamp Duty Land Tax exemptions for first-time buyers on properties up to £500,000 that are included in the shared ownership programme.
This new tax relief allowance will be available to all first-time buyers purchasing an eligible property through approved shared ownership schemes and who decide to pay their SDTL in stages instead of on the market value of their residential property.
This new change to SDTL will be applied retrospectively to all eligible property transactions since it was first introduced in November 2017. Prior to this recent announcement, the tax-free threshold for shared ownership properties was £300,000 for first-time buyers.
In the Autumn Budget, the Chancellor also announced the latest government initiative to help save first-time buyers’ money when purchasing a home. A new Help to Buy equity loan will be made available from April 2021, which will be in place for two years for eligible first-time buyers purchasing properties with a market value up to new regional property price caps, with the maximum being £600,000 for London properties.
The Chancellor announced a number of other measures in the Autumn Budget 2018 to address the housing shortage in the UK, which has been contributing to the problem of many young people being unable to afford their first home.
The Chancellor also promised in the Autumn Budget, to provide £2 billion of new funding for the Affordable Homes Programme to help boost housing associations over the next decade. As well as a further £500 million to be given towards the Housing Infrastructure Fund to help improve the current infrastructure in order to permit new sites to be made available for residential housing.
The Chancellor also promised £1 billion of funding to be made available in the form of British Bank Guarantees, in order to help smaller housebuilders to build more homes.
Although both the Stamp Duty Land Tax relief and government investment in the residential building sector will have a positive benefit for first-time buyers, experts in the property industry have concerns about whether these measures will be successful.
Former residential chairman of the Royal Institution of Chartered Surveyors, and North London estate agent, Jeremy Leaf, commented on the Autumn Budget 2018. “The most disappointing aspect of this Budget is that nothing has been done to improve low transaction levels, which is not just bad for the property market but even worse for the wider economy.”
“Given the rapid expansion of the private rented sector over the past few years, more support to Generation Rent would also have been welcome, such as sales of rental property to long-term tenants. It is also disappointing that there was no comment on extending Help to Buy or further detail on how the government will meet its 300,000 a year housebuilding target.”
“The shared ownership extension of the stamp duty exemption to first-time buyers is welcome but the scheme is still not easy enough to get into or add to in our experience.”
The recent HMRC data has shown at least that the government’s tax relief initiatives are benefitting those first-time buyers who have been able to own their own home. However, there are many younger renters who are finding themselves trapped by unaffordable property prices and are still unable to become a first-time buyer, even with these government initiatives in place.
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