What you need to know about the new Stamp Duty changes

By Lauren Burns

The stamp duty changes announced in the Chancellor's budget speech have effectively created a third rate of Stamp duty for home buyers in Northern Ireland and the rest of the UK.

While the headline from the announcement is very clear - No stamp duty for first time buyers purchasing a property up to a value of £300,000 - there are some fine distinctions to the changes, and how stamp duty works in general, that require a bit more explanation.

If you are buying a house in Northern Ireland or the rest of the UK you will now be indentified as falling into one of three groups of property purchasers for stamp duty purposes:

 

  1. A first time buyer who has never owned any interest whatsoever in a residential property. If more than one person is buying the property, all purchasers need to be acquiring a property interest for the first time.

  2. A property owner who is replacing their main residence by selling their current home and purchasing a new property to move into as their principal place of residence. They may own other properties which they do not personally reside in.

  3. A property owner who purchasing an additional property, including a new main residence, but who is not selling their current place of residence because they do not own it, or they intend to keep it following their new purchase.

 

Are you a first time buyer?

While the above description is on the face of it very straight forward, there are one group of property owners that need to be aware of a distinction when it comes to the new stamp duty rules.

Anyone who purchased their home via a shared equity scheme, such as Co-ownership in Northern Ireland, will potentially be liable for stamp duty when they go to buy out the remaining equity in the property. They will of course already own an interest, albeit not a full one, in the property and will not therefore be considered first time buyers for stamp duty purposes. If you are considering buying out the remaining equity in your property, and you deferred stamp duty payment at the time of your initial purchase, your property conveyancing solicitor will be able to advise you of your current stamp duty obligations.

If you have never owned any interest whatsoever in a residential property you will be classed as a first time buyer, and no stamp duty is payable on any property costing £300,000 or less. You will have to pay stamp duty on any amount over the £300,000 on a higher value property.


Home movers and the standard rate of stamp duty 

Anyone selling their main residence and purchasing a new one will pay the standard rate of stamp duty, irrespective of whether or not they own any other properties. The rate that applies for these property buyers are as follows:

 

Property Value

Stamp Duty rate (only applies to that part of the property price that falls within each band)

 

£0 - £125,000

0%

£125,001 -  £250,000

2%

£250,001 - £925,000

5%

£925,001 - £1.5 million

10%

Over £1.5 million

12%

 


Purchasing an additional property - the higher rate of stamp duty 

Anyone who is not selling their current main residence and is purchasing an additional property will be liable to pay stamp duty at 3 per cent above the standard rate. The rate applies to properties valued at over £40,000.

 

Property Value

Stamp Duty rate (only applies to that part of the property price that falls within each band)

 

£0-40,000

0%

£40,001 - £125,000

3%

£125,001 -  £250,000

5%

£250,001 - £925,000

8%

£925,001 - £1.5 million

13%

Over £1.5 million

15%

 

 

How long do you have to pay Stamp Duty?

Your property conveyancing solicitor will factor your stamp duty payment into the balance monies they need to receive from you to complete your property purchase, and they will make the payment to the HMRC on your behalf. They have 30 days to do this from the date the purchase completes.

If you need to speak to a property conveyancing solicitor in Northern Ireland in respect of stamp duty, or any other matter relating to a house purchase, contact Wilson Nesbitt in Belfast or Bangor by clicking here.

To work out how much stamp duty you will be liable to pay on your property purchase you can use the HMRC stamp duty calculator by clicking here.