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Where in Britain first-time buyers are least likely to pay stamp duty

First-time buyers can escape stamp duty, but whether they can squeeze under the £300,000 tax-free threshold depends on where they want to live.

Across the country, six out of 10 homes for sale over the past year could be exempt from stamp duty for first-time buyers, new research has revealed.

But while first-time buyers in Bootle, in Merseyside, and Shildon, in County Durham, would be almost certain to find a home that they wouldn’t be charged stamp duty on – with 99.6 per cent priced in that bracket – those in Buckinghamshire’s, Beaconsfield, would only have a one in 50 chance.

The study by property website Zoopla compared homes for sale to the stamp duty threshold for locations across England, Scotland and Wales.

Six out of 10 homes for first-time buyers were exempt from stamp duty last year, but in some locations such as the top ten on this map new homeowners are almost certain not to pay it

Exempt from stamp duty for first-time buyers: This three-bed house in Bootle, Merseyside, is for sale for £165,000

Exempt from stamp duty for first-time buyers: This three-bed house in Bootle, Merseyside, is for sale for £165,000

Scotland is home to the highest percentage of first-time buyer tax-exempt properties, at 61.4 per cent, while perhaps surprisingly Wales, at 56.1 per cent, had less than England, at 58.2 per cent.

In London, the borough of Croydon was home to the highest percentage at 26.8 per cent.

Stamp duty on property purchases is charged at different rates that rise above thresholds depending on the value of the home, beginning at 2 per cent between £125,001 and £250,000 and rising to 12 per cent above £1.5million.

Stamp duty calculator 

This is Money’s stamp duty calculator shows that the bill for a £300,000 home would usually be £5,000.

Find out how much a property purchase would cost you here.

> Stamp duty calculator 

However, special rates are currently given to first-time buyers to help them onto the property ladder. 

These thresholds differ depending on whether you are a first-time buyer in England, Scotland or Wales.

The stamp duty thresholds for first-time buyers begin at £300,000 for homes in England, while they begin at £175,000 in Scotland. 

In Wales, all types of buyer – including first-time buyers – start paying stamp duty at £180,000. 

The stamp duty break for first-time buyers below £300,000 in England was introduced by former Chancellor Philip Hammond in November 2017 and includes a partial relief for properties costing up to £500,000, whereby the amount up to £300,000 is tax-free.

To qualify buyers must never have owned a home, or share in one, anywhere in the world before and for those buying with a partner that must be the case for both purchasers.

In total, 59 per cent of homes for sale fall under the stamp duty land tax threshold for first-time buyers across Britain. 

PLACES WITH HIGHEST PERCENTAGE OF HOMES EXEMPT FROM STAMP DUTY
Rank Postal Town Average value October 2019 % Below FTB SDT Threshold % Above FTB SDT Threshold
1= Bootle £100,534 99.60% 0.40%
1= Shildon £84,286 99.60% 0.40%
3 Heckmondwike £132,383 99.20% 0.80%
4= Blyth £127,087 99.00% 1.00%
5= Gateshead £139,084 99.00% 1.00%
6 Stanley £101,752 98.90% 1.10%
7 Fleetwood £121,497 98.70% 1.30%
8 Peterlee £90,608 98.60% 1.40%
9 Mexborough £128,827 98.50% 1.50%
10 Jarrow £126,607 98.30% 1.70%
Source: Zoopla       
PLACES WITH LOWEST PERCENTAGE OF HOMES EXEMPT FROM STAMP DUTY
Rank Postal Town Average value October 2019 % Below FTB Tax Threshold % Above FTB Tax Threshold
1 Beaconsfield £1,048,917 1.70% 98.30%
2 Ingatestone £724,203 2.00% 98.00%
3 Chalfont St Giles £1,004,298 3.40% 96.60%
4 Radlett £963,548 3.80% 96.20%
5 Thames Ditton £744,210 4.60% 95.40%
6 Harpenden £828,402 4.90% 95.10%
7 Teddington £746,443 5.00% 95.00%
8 Virginia Water £1,331,011 5.30% 94.70%
9 Usk £366,077 5.80% 94.20%
10 Windlesham £703,504 6.80% 93.20%
This three-bed house in Shildon, County Durham, is for sale for £199,950 - making it exempt from stamp duty for first-time buyers

This three-bed house in Shildon, County Durham, is for sale for £199,950 – making it exempt from stamp duty for first-time buyers

After Bootle and Shildon, in County Durham, where 99.6 per cent of homes listed for sale are stamp duty free for first-time buyers,  Heckmondwike, in West Yorkshire, has the next most tax-exempt homes at 99.2 per cent.

It is followed by Blyth, in Northumberland, and Gateshead, in Tyne and Wear, both at 99 per cent.

By contrast, Beaconsfield in Buckinghamshire has the fewest amount of properties where first-time buyers are exempt from paying stamp duty, at just 1.7 per cent.

The village of Ingatestone in Essex is in second place at 2 per cent and Chalfont St Giles in Buckinghamshire is in third at 3.4 per cent.

Stamp duty-free for first-time buyers: This two-bed flat in Croydon, Surrey, is on the market for £275,000

Stamp duty-free for first-time buyers: This two-bed flat in Croydon, Surrey, is on the market for £275,000

This four-bed house in Batley, West Yorkshire, is on the market for £180,000, and so is free from stamp duty

This four-bed house in Batley, West Yorkshire, is on the market for £180,000, and so is free from stamp duty

In London, Zoopla analysed homes for sale across boroughs for those under the stamp duty threshold of £300,000, while also looking at the percentage of properties where first-time buyers receive a proportion of stamp duty tax relief due to prices being £500,000 or below.

As well as paying no stamp duty up to £300,000, first-time buyers buying homes for more than that amount but less than £500,000 are also entitled to only pay tax on the portion between £300,001 to £500,000, at the standard rate of 5 per cent.  

In first place for stamp duty exemption and partial relief was the London borough of Croydon, where 26.8 per cent of homes were for sale for less than £300,000 in the past 12 months.

This rose sharply to 81.7 per cent when first-time buyers were able to receive some relief.

The London borough of Kensington and Chelsea, home to some of Britain’s most expensive addresses, has just 9.2 per cent of properties where first-time buyers received any tax relief.

This studio in London's Earl's Court, in the borough of Kensington & Chelsea, is on the market for £200,000 and is exempt from the tax for first-time buyers

This studio in London’s Earl’s Court, in the borough of Kensington & Chelsea, is on the market for £200,000 and is exempt from the tax for first-time buyers

Zoopla’s Laura Howard said: ‘The various first-time buyer tax reliefs across Britain have helped put more than 59 per cent of homes firmly in the stamp duty-free zone.

‘Buying your first home is usually the most costly thing you’ll ever do, so the maximum £5,000 saving made possible with this tax relief is welcome – after all it could cover your survey and legal costs.

‘It’s important to remember that the Government sets down a strict definition of “first-time buyer”. If you – or anyone you are buying with – have ever owned a property, or even part of one, previously, either in the UK or abroad, you will not qualify for the tax break.

‘While first-time buyers are now not treated differently in Wales in terms of stamp duty, lower property prices there mean that 56 per cent of homes respectively are also exempt, which is still a welcome reality.’

PERCENTAGE OF HOMES EXEMPT FROM STAMP DUTY FOR FIRST-TIME BUYERS
County FTB Tax Threshold % Below FTB Tax Threshold % Above FTB Tax Threshold
England £300,000 58.20% 41.80%
Scotland £175,000 61.40% 38.60%
Wales £180,000* 56.10% 43.90%
Great Britain N/A 59.20% 40.80%
Source: Zoopla

WHAT PERCENTAGE OF FIRST-TIME BUYERS PAY STAMP DUTY?

First-time buyers who buy a house for £300,000 or less do not pay any stamp duty. 

HMRC does not publish official figures for those first-time buyers who pay stamp duty if they purchase a house above £500,000.

However, the percentage of first-time buyers who buy a house between £300,001 and £500,000, and pay stamp duty  is 22 per cent, according to HMRC.

Stamp duty has different names and thresholds depending on which country you are in, including Land Transaction Tax in Wales and Land and Buildings Transaction Tax in Scotland.

Both England and Scotland have separate rates for first-time buyers while Wales does not – and so Zoopla applied the threshold that everyone has to adhere to in its research for Wales. 

 

LONDON HOMES EXEMPT FROM STAMP DUTY FOR FIRST-TIME BUYERS
Rank Borough Average value October 2019 % Below FTB SDT Threshold % Above FTB SDT Threshold % Partial SDT discount (Under £500k)
1 Croydon £410,162 26.80% 73.20% 81.70%
2 Bromley £512,679 18.10% 81.90% 79.70%
3 Newham £360,572 18.80% 81.20% 74.90%
4 Lewisham £454,830 15.10% 84.90% 64.00%
5 Greenwich £441,652 17.60% 82.40% 63.20%
6 Waltham Forest £431,366 14.10% 85.90% 59.60%
7 Enfield £456,675 17.60% 82.40% 59.40%
8 Redbridge £441,735 8.90% 91.10% 51.60%
9 Brent £507,744 7.00% 93.00% 47.60%
10 Tower Hamlets £520,439 3.00% 97.00% 46.00%
11 Haringey £616,483 5.80% 94.20% 44.20%
12 Lambeth £632,812 5.20% 94.80% 40.70%
13 Ealing £559,927 4.60% 95.40% 37.00%
14 Southwark £606,882 5.10% 94.90% 35.90%
15= Merton £612,911 5.60% 94.40% 35.80%
15= Barnet £636,032 5.70% 94.30% 35.80%
17 Hackney £575,087 2.40% 97.60% 35.20%
18 Islington £765,795 1.50% 98.50% 29.50%
19 Wandsworth £724,749 2.80% 97.20% 27.70%
20 Hounslow £522,052 1.50% 98.50% 25.60%
21 Camden £1,033,575 1.70% 98.30% 18.60%
22 Hammersmith and Fulham £934,117 1.60% 98.40% 18.50%
23 Westminster £1,304,246 9.10% 90.90% 18.30%
24 Richmond upon Thames £850,053 0.70% 99.30% 14.50%
25 Kensington and Chelsea £1,935,105 1.50% 98.50% 9.20%
Source: Zoopla         

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