End of Stamp Duty Holiday for First-Time Buyers (FTBs) – March 2012 looms

Posted on Tuesday, January 24, 2012

To avoid hefty tax charges, FTBs need to have completed their purchase before 25 March 2012.

Relief is available if all of the following apply:

The effective date is on, or after, 25 March 2010 and before 25 March 2012the consideration given is £250,000 or lessthe buyer intends to live in the property and it will be their only, or main homethey have not previously owned property or land either in the UK or anywhere else in the world - including property bought with anyone else

This means that, up to and incuding 24 March 2012, the threshold for qualifying first-time buyers of residential property is £250,000. Financial institutions can claim the SDLT relief for first-time buyers using alternative finance schemes.

Currently, first-time buyers don't pay any stamp duty on properties priced between £125,000 and £250,000, whereas other buyers will pay 1% of the sale price to HMRC. Properties worth less than £125,000 are not subject to stamp duty at all.

The challenge for first-time buyers is often saving a sufficiently large deposit to secure a competitively priced mortgage.

New mortgage products are regularly coming on to the market and, for those who don't have the ‘bank of mum and dad’ to fall back on, they may be able to get funding from some of the smaller building societies (such as National Counties) who offer "family offset" mortgages – whereby parents don't have to hand over cash, but can keep it in their own, linked savings account, reducing the amount their offspring need to borrow. Woolwich is expected to launch a similar deal early this year.

For first time buyers in the buy-to-let mortgage

The Stamp Duty holiday does not apply to FTBs in the buy-to-let market as one of the conditions for relief is that buyers intend to live in the property and it will be their only or main home.

However, there are three main lenders who will consider first-time buyers (i.e. no mortgage history at all) for buy-to-let, these being:

Kent Reliance (up to 75% LTV)

Northern Rock (up to 70% LTV)

Woolwich (up to 60%)

ARLA Mortgages can help with buy-to let mortgages