Do You Pay Stamp Duty as a First Time Buyer?

Buying your first home is exciting, but let’s be honest, it can also feel overwhelming.

Between saving for a deposit, understanding mortgages, and navigating legal fees, there’s a lot to get your head around. One question that crops up time and again is whether you’ll need to pay stamp duty as a first-time buyer.

The good news – in many cases, you won’t pay a penny. But as with most things property-related, there are some important details to understand. Let’s break it down.

What actually makes you a first-time buyer?

Before we dive into stamp duty, it’s worth clarifying what counts as a first-time buyer in the eyes of HMRC. You’ll qualify if you’ve never owned property anywhere in the world, not just the UK. That includes properties you’ve inherited or owned jointly with someone else.

If you previously owned a property but sold it before buying your new home, you won’t qualify for first-time buyer relief. The same applies if you’re buying with a partner who has owned property before, even if it’s your first purchase. It’s worth checking your status early on to avoid any surprises down the line.

First-time buyer schemes: what’s available

The UK government offers several schemes designed to help you get on the property ladder. The most relevant for stamp duty purposes is the first-time buyer stamp duty relief, which we’ll cover in detail shortly.

Beyond stamp duty relief, there are other first time buyer scheme options worth exploring. For example, the First Homes scheme offers first-time homeowners the option to buy a home for 30% to 50% less than its market value (certain eligibility applies). Also, shared ownership allows you to buy a share of a property and pay rent on the remainder.

Some first-time buyers also benefit from the Lifetime ISA, which adds a 25% government bonus to your savings (up to £1,000 per year) when used towards your first home purchase.

Each scheme has different eligibility criteria and advantages, so it’s worth exploring which combination works best for your circumstances and financial goals.

Understanding Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax is a tax you pay when purchasing property or land in England and Northern Ireland over a certain threshold. Think of it as a one-off payment to the government when you complete your purchase.

For most buyers, stamp duty is calculated on a sliding scale. The more expensive the property, the higher the percentage you pay on portions of the purchase price. These rates increase in bands, similar to how income tax works.

Here’s where it gets interesting for first-time buyers: you’re entitled to relief that can save you thousands of pounds. This first-time buyer mortgage benefit was introduced specifically to help people like you afford that crucial first step onto the property ladder.

When do first-time buyers actually pay Stamp Duty?

The first-time buyer stamp duty relief means you’ll pay no stamp duty on properties costing up to £300,000. If your property costs between £300,001 and £500,000, you’ll only pay 5% on the amount above £300,000. If your property costs more than £500,000, you cannot claim the relief. You’ll pay the standard rates that apply to all buyers. To help calculate how much SDLT you may pay, use our helpful calculator as a guide.

Let’s look at a practical example. Say you’re buying a property for £500,000. You’d pay 5% stamp duty only on the £200,000 above the threshold (£500,000 – £300,000), which equals £200,000. Without first-time buyer relief, you’d pay significantly more.

It’s also worth noting that these thresholds and rates can change with government budgets, so always check the current figures when you’re ready to buy.

Additionally, stamp duty first-time buyers relief only applies if you intend to live in the property as your main residence. If you’re buying to let it out, you won’t qualify and you might actually face higher rates.

Why a mortgage adviser makes all the difference to your first purchase

Working out your stamp duty liability is just one piece of the puzzle. A good mortgage adviser does far more than arrange your first time buyer mortgage, they help you understand the complete financial picture of your purchase.

They’ll calculate exactly what you’ll pay in stamp duty based on your specific purchase price, explain how different schemes could work for you, and potentially identify savings you hadn’t considered. They have access to mortgage products you won’t find on comparison websites and can often secure better rates than you’d achieve alone.

Perhaps most importantly, they’ll walk you through each stage of the process, translating industry jargon into language that actually makes sense. When you’re making the biggest financial commitment of your life so far, having an expert in your corner provides invaluable peace of mind.

The home-buying journey doesn’t need to feel like navigating a maze blindfolded. With the right support and clear information about your obligations (including stamp duty) you’ll feel confident taking that exciting first step onto the property ladder.

Keen to learn more about first-time buyer mortgages? Get in touch with one of our friendly advisors today.