First-time buyer stamp duty exemption

Simon Nosworthy

Stamp duty is the bane of every home buyer, with only first-time buyers being exempt from paying the tax if they purchase properties for £300,000 or less.

The first-time buyer stamp duty exemption has undoubtedly helped increase the number of people getting on the property ladder, with the highest number of first-time buyers since before the financial crisis being recorded in August, recent figures show.

However, I am seeing more and more clients getting stung for the duty when they did not expect to do so as plenty of caveats prevent first-time buyers from benefitting.

What is first-time buyer stamp duty exemption?

Since 1 April 2025, first-time buyers in England and Northern Ireland are exempt from paying the duty on properties purchased up to a value of £300,000. This means first-time buyers can save up to £5,000.

If your new home is worth £300,001 to £500,000, you’ll pay 5% stamp duty, but only on the value above £300,000. For example, if you were paying £500,000 for your first home, you would have a £10,000 stamp duty tax bill. That is 5% of the £200,000 above the £300,000 relief threshold. Above £500,000 the relief is lost altogether and the standard rates apply to the whole price.

These thresholds changed on 1 April 2025. The temporary higher thresholds that applied from 22 September 2022, which gave first-time buyers relief up to £425,000 and a £625,000 upper limit, came to an end on 31 March 2025.

Who qualifies for first-time buyer stamp duty exemption?

To qualify as a first-time buyer, you must never have owned or had an interest in a residential property in the UK or overseas. This includes both freehold and leasehold property. This sounds simple enough, but the rules are strict, and potential surprises exist.

For example, things can get complicated when people purchase a property together. Many people assume that as one party is a first-time buyer, they will automatically qualify, but this is not the case if one of the parties purchasing the property has ever owned another property or part of one in the past.

It is, of course, possible to not put the name of the person who is not eligible for the first-time buyer relief on the deeds, but this raises ownership issues. If your name is not on the deeds, you may struggle to have a claim over the ownership of that property.

Another issue is if you have inherited part or all of a property. If you inherit a property you are no longer eligible for the first-time buyer exemption, despite never having purchased a property.

This is a particular issue with people not from the UK, as there are different inheritance laws abroad. In some countries, people automatically receive a percentage of a property if a relative dies.  I have had clients who have not even visited a property they had a stake in.

In the past, some clients have assumed that they would still be considered first-time buyers as they have only bought an investment property. This is not the case. People argue that they are buying their first home, but the rules are strict and are for ownership of any property.

The first-time buyer exemption also sometimes becomes an issue if the bank of Mum and Dad is involved in helping with the deposit for a purchase. Sometimes parents say they don’t want to gift the money to their child and want to have a stake in the property. When this happens, their child is no longer eligible for the exemption.

What is the average first-time buyer price in the UK?

According to money.co.uk, the average price paid by first-time buyers in 2023 was £245,522. The average age of first-time buyers was 33.4 years old.

What is the average first-time buyer price in London?

In London the average price paid was £466,660. That is above the £300,000 threshold, so the average London first-time buyer would not escape stamp duty altogether, but the purchase is still under the £500,000 limit, so partial relief applies and only the amount above £300,000 is taxed. The average age of first-time buyers in London was 33.8 years old.

What should first-time buyers do?

There have been a few occasions where I have had to give a client the bad news that they are not eligible for the first-time buyer exemption as they aren’t first-time buyers in the eyes of the taxman. This can come as a rude awakening to clients, with some deals even collapsing.

The main thing that people should do is get legal advice early and don’t just assume that they are first-time buyers. If you get advice, you will go into your purchase with your eyes wide open.

Nobody wants to hear that they are going to have to find up to £5,000 extra, but this can be a reality.

Get expert advice to ensure you are eligible for first-time buyer relief

Early advice will allow you to assess your options and help you avoid a potentially nasty and expensive surprise down the road.

To speak with Simon one of our other property solicitors, contact us by:

• Filling in our online enquiry form; or
• Calling us on 020 7485 8811