2018 Budget News – Stamp Duty reduced for first-time shared ownership purchasers – and it’s back-dated too
Chancellor Philip Hammond yesterday announced plans to correct an anomaly from his previous Budget by cutting stamp duty for first-time buyers of shared ownership properties worth up to £500,000.
And there was more good news. The Chancellor said the relief will be applied retrospectively from his previous Budget (November 2017) to shared ownership properties bought in England and Northern Ireland.
Shared ownership is a means of getting onto the housing ladder which involves buying a share in a property and renting the rest. It has proved a cost-effective way for many first-time buyers to move into a home they can call their own.
Removing unfair anomalies
Last year, the Chancellor raised the 0% stamp duty threshold to £300,000 from £125,000 in order to help first-time buyers. However, the way in which it applied to shared ownership purchases was far from straightforward or fair.
Previously, to qualify for the stamp duty exemption given in 2017 to first-time buyers of homes priced up to £300,000, buyers of a shared ownership property had to elect to be taxed on the full market value of the home (up to £500,000) rather than just on the share they were buying.
A purchaser paying £125,000 for a 25% share of a new home valued at £500,000 would have found themselves paying £10,000 stamp duty – equivalent to 5% of the sales price above £300,000.
Alternatively, purchasers could elect to use their first-time buyer exemption on the first share of the property they bought, but would have had to pay stamp duty at the full rate on all further shares they purchased, regardless of whether the sum of all payments was less than £300,000.
Commenting on this welcome development, Sheri-Anne Mizon, Partner and Head of Residential Property (Loughton) said: “First-time buyers purchasing shared ownership homes are often doing so because it represents a cheaper way of making that all-important first move onto the housing ladder. Making shared ownership home buyers eligible for the first-time buyer stamp duty exemption is a fair and very helpful move, and it’s even better news that this change has been back-dated to November 2017.”
Here to help
If you bought a shared ownership property during the last year, and would like advice on making a claim for a stamp duty refund, then do get in touch.
Contact Sheri-Anne Mizon on 0203 871 0007, or alternatively email Sheri-Anne Mizon