First-time buyers using shared ownership schemes may miss out on the Government’s stamp duty exemption as the two polices clash.
Both policies have been designed to help young people enter the housing market, however, it has emerged that many shared ownership properties are too expensive for the stamp duty break to be utilised.
Also, the exemption will not be available for buyers who opt to pay their stamp duty in chunks to reduce their initial costs.
First-time buyers of properties worth less than £300,000 won’t have to pay any stamp duty at all, whilst those who purchase a property worth up to £500,000 will get partial relief. Buyers of properties over £500,000 will still be required to pay the full amount of stamp duty – this also includes first-time buyers who are buying a share of a property valued at over £500,000 even though they will only own part of it.
When buying a shared ownership property for the first time, buyers have 2 options when it comes to stamp duty.
They can either pay stamp duty on the share of the home they are purchasing and then pay the rest of the bill when they buy the remainder of the property at a later date or they can opt to pay stamp duty on the full market value upfront.
The HMRC have confirmed that the stamp duty exemption will not be available for people who wish to pay only their share of stamp duty, so if first-time buyers wish to benefit from the exemption (providing the property is within the correct price bracket), they will have to choose to pay stamp duty on the full market value of the property upfront or face a higher bill overall.
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