Government Changes May 2012

To encourage first time buyers onto the property ladder in 2010 the Inland Revenue announced that they would be relieved of SDLT (Stamp Duty Land Tax) if they were purchasing a property under the amount of £250,000. At the end of March 2012, this relief came to an end and so unless a buyer is purchasing for less than £125k, SDLT will be payable.

Purchase Price Thresholds      % Charged

£0 to £125,000                                    0%
£125,000.01 to £250,000                    1%
£250,000.01 to £500,000                    3%
£500,000.01 to £1 million                   4%
£1 million +  to £2 million                    5%

In March 2012, the government then announced there would be another change to SDLT and that house purchases over 2 million pounds would now attract a 7% SDLT rather than the 5%, this increase comes just 12 months after the introduction of the 5% threshold in the previous budget.

However, in an attempt to boost purchases of new homes there has been an introduction of a scheme where the Government guarantee a 5% deposit for buyers who are buying new build properties up to the value of £500,000. This is known as the NewBuy Scheme and there seems to be no specific criteria for an individual or couple to qualify for this scheme so it is not just aimed at first time buyers . The idea is that for those people who can successfully obtain a mortgage and maintain payment of it, but cannot achieve a 10 % or 15% deposit they can still buy a property with Lenders providing a 90%-95% loan to value mortgage with the support of the government guaranteeing 5% in order to protect the Lender in the unfortunate event of a repossession. The scheme is positive and aims to assist buyers getting onto the property ladder, builders selling their new properties and Mortgage Lenders being secure with a guarantee from the Government which encourages their funding.

For more than a summary of the scheme and for more details, I suggest you contact any developer or Mortgage Lender who is signed up to it and who can let you have more information on the terms and conditions which apply for you or visit www.newbuy.org.uk the official NewBuy Government backed website.