Friday 15 March 2019 11:52 am

Opinion: First time buyers purchasing new builds with the help of Mum and Dad are missing out on SDLT relief

Stamp duty land tax relief for all first-time buyers for purchases up to £500,000: this was the pledge made by the Chancellor, Rt Hon Philip Hammond MP, in the 2017 Autumn Budget. Given the usual stamp duty threshold is far lower than the average house price in London, this was a big win for first-time buyers. But it always pays to read the fine print, and buyers should beware of an oddity that’s since emerged meaning Hammond’s promise isn’t accessible to all.

This problem arises for first-time buyers who are getting onto the property ladder with financial help from the Bank of Mum and Dad, who are purchasing new-build flats – where at completion the buyer is granted a new lease.

Ironically enough, that’s exactly the sort of home many first-time buyers are being encouraged to purchase through Help to Buy and Starter Homes schemes. At best this legislative trap limits opportunities and, at worst, means first-time buyers are handed a surprisingly bigger bill at the end of the process. It’s also likely that it’s disproportionately affecting buyers in urban areas, particularly London, where new build flats are often the best opportunity for first timers.


The anomaly exists because the Government has not provided an ‘exception’ in its legislation relating to stamp duty relief for first-time buyers on new leasehold properties. It appears to be an oversight, but it’s a considerable one at that.

This problem arises for first-time buyers who are getting onto the property ladder with financial help from the Bank of Mum and Dad, who are purchasing new-build flats – where at completion the buyer is granted a new lease.

So, what should you do to avoid being landed with an unexpected stamp duty tax bill?

If you’re purchasing a new build property as your first home, and your parents are joining the mortgage as the bank would not lend to you on your current salary alone, you must ensure that your parents’ names are not included on the lease. Only yours should appear. Take those steps, and first-time buyers should be fine.

Blake Morgan, my law firm, along with Laytons LLP and KPMG, is calling on the Government to amend the legislation and honour its pledge to all first-time buyers purchasing for up to £500,000. We’re in dialogue with HM Treasury to suggest it tables a small amendment to change the legislation. There’s no clear policy reason for denying the stamp duty relief in these circumstances and we don’t believe Parliament set out to create this anomaly.

The fact does remain, however, that the legislation appears to treat a first-time buyer who’s taking a new lease differently from a first-time buyer in an otherwise identical position who buys a freehold or takes the assignment of an existing lease.

Until this is amended, it will remain a pitfall for buyers to be aware of and we urge the Government to remove it to honour its pledge to all.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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