First time buyer exemption
The measure
A relief is introduced on residential home purchases where the consideration is above £125,000 but not more than £250,000. Residential property for these purposes is effectively a freehold interest or a lease of more than 21 years.
Who will be affected?
The relief, which is subject to anti-avoidance provisions, will only be available to those purchasers who are buying residential property for the first time (considering previous acquisitions, wherever in the world) and where they intend to occupy the property as their sole or main residence.
When?
The relief will apply where the SDLT effective date is on or after 25 March 2010 and before 25 March 2012.
The measure, it is hoped, will reinvigorate the housing market after Bank of
England mortgage data shows the end of the £175,000 holiday at the start of the
year held back the house price recovery. The measure, which is unlikely to be
dropped if there is a change of Government (as it is consistent with
Conservative policy) will likely distort further the housing market around the
new £250,000 threshold. First-time buyers purchasing a house above £250,000
(even by £1) will pay a minimum of £7,500 in tax.
In 2008-2009, the Treasury reported that the Exchequer received approximately
£500m from residential purchasers where the consideration was £250,000 or less.
The Chancellor noted today that 9 out of 10 first time buyers would now be
exempt from SDLT. However, the cost to the Exchequer of introducing these
measures will depend on the numbers of first-time buyers who are paying more
than the nil rate threshold of £125,000. Earlier this month it was reported that
first-time buyers dropped to 25% (down from a usual 40%) of the total market.
