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Budget review – More than a sausage for first time buyers

26 March 2010

Conveyancing

Ann-Marie Lock looks at how the budget will impact first time buyers and what it means for those purchasing properties over £1 million.

2009 was a good year for many home buyers. VAT was lowered to 15% and the Government increased the Stamp Duty Land Tax thresholds so that if you purchased a property for under £175,000, you did not have to pay any duty.

Unfortunately, these measures came to an end on 31 December last year whereupon VAT returned to 17.5% and Stamp Duty Land Tax thresholds dropped back to previous levels. This led to a sudden rush of people wanting to complete their property transactions before the beginning of 2010.

Subsequently, mortgage lending dropped sharply in January and all looked rather bleak, particularly for first time buyers.

However, spring has sprung and despite expectations of not even a sausage being given to home purchasers by the Chancellor, the March Budget will have delighted many first time buyers.

As of 25 March 2010, no Stamp Duty Land Tax is payable by first time buyers purchasing residential property up to the vale of £250,000.

So, who are first time buyers?

The answer to this question may seem obvious but there are criteria which must be satisfied in order for you to qualify as such:

  1. You and anyone that you might be buying your house with must not have previously owned a property in this country or anywhere in the world. Therefore if you have inherited property or owned a house jointly with an ex-spouse or ex-partner, you will not be classed as a first time buyer.
  2. You must intend to occupy the property as your main home.

 

This welcome measure will continue until 25 March 2012, so if you are thinking of purchasing your first home, you have plenty of time to take advantage of the relief.

However, it is not all good news. A new 5 per cent rate of Stamp Duty for residential properties over the value of £1 million will apply to purchases as of 6 April 2011.

The current rate for properties of this value is 4 per cent. Therefore, if you are thinking of purchasing a property over the next year in excess of £1 million, ensure that you complete your transaction before 6 April 2011 in order to take advantage of the current lower rate.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
Email: marketing@warners-solicitors.co.uk