Chancellor of the Exchequer Philip Hammond, in his November Budget, announced that the stamp duty for first-time buyers purchasing a home for £300,000 or less will be scrapped. Homes worth more are not charged stamp duty on the first £300,000 of the purchase price.
But what does the term ‘first-time buyer’ mean? It sounds like a very basic question, but the government has a strict definition of who is and who is not classed as a first-time buyer.
A first-time buyer, the government says, is a person who has never owned property. This is not restricted to properties in the UK. Owning residential property overseas means that a person is not a first-time buyer. Also excluded are people who have been in a housing association shared ownership scheme or jointly owned property.
If the first house is not a main residence, then full stamp duty is charged. This means that purchasing buy-to-let property with a commercial mortgage is subject to the full stamp duty even if it is the only property owned by an individual. Parents cannot purchase a holiday home and put it in their child’s name, as this is not classed as a main residence.
Some people may be tempted to change their name by deed poll to make it appear as if they are a first-time buyer, but if they own a home in a former name, and the inland revenue finds out, they could be prosecuted for fraud.
The scrapping of stamp duty is targeted to only benefit genuine first-time buyers who are purchasing residential property as their main residence.