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Stamp Duty Abolished for all first-time buyers of shared ownership properties worth up to £500, 000 and Help to Buy Scheme extended to 2023!
Chancellor Phillip Hammond 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.
What is Shared Ownership?
Shared Ownership gives first time buyers and those that do not currently own a home the opportunity to purchase a share in a new build or resale property. You would pay mortgage on the share that you own and pay rent to the housing association on the remaining share.
Because you would only need a mortgage for the share that you are buying, the amount of money required for a deposit is a lot lower when compared to the amount that would be required when purchasing outright.
You would have the option to increase your share during your ownership via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%, thereby owning the property outright.
Position in 2017
To qualify for the stamp duty exemption in 2017, first-time buyers of shared-ownership property priced up to £300,000 could elect to be taxed on the full market value of the home (up to £500,000.00) or on the share purchased. If the full market value of the shared-ownership property was more than £500,000, you would not have been eligible for any stamp duty reduction at all.
If you elected to pay on the share you were acquiring, you could use the first-time buyers’ exemption on the first share of the property, but would have to pay full rate stamp duty on all further shares you purchased, regardless of if the sum of all payments was less than £300,000.
Following the announcement of the Budget, if you are buying a shared ownership property, you will be exempt from stamp duty where the property is worth up to £500,000.
Unlike the stamp duty exemption for first time buyers, the rules for shared- ownership purchases also applies retrospectively to 22nd November 2017. So, if you purchased a shared-ownership property after that date and paid stamp duty, you would be eligible for a refund.
Mr Hammond promised an extra £500m for the Housing Infrastructure Fund - a pot of money that local councils can apply to for help with building homes. This extra cash should help build 650,000 more homes, he said. The Help to Buy Scheme, which offers a 20% loan (40% in London) to those buying new build properties, has also been extended to 2023.
The government has also struck deals with nine housing associations to deliver 13,000 homes across England. Mr Hammond also said funding would be available to help up to 500 neighbourhoods to allocate land for housing and sell the homes to local people at a discount.
This can only come as good news for those wanting to take that all important step onto the property ladder. Our Emery Johnson Astills Conveyancing Team in Leicester and Loughborough are happy to assist if you are buying or selling a house, including Shared Ownership properties, Right to Buy and New Builds with Help to Buy Scheme loans.
If you require assistance or further information, please contact our Emery Johnson Astills Conveyancing Team on 0116 2554 855 (Leicester) or 01509 610 312 (Loughborough).