Read the original guidance here:
HMRC SDLT: First-Time Buyers’ Relief: Conditions and Eligibility for Property Purchases Under £625,000

The Conditions for First-Time Buyer Relief

In this section, we will explain the rules that govern the relief available to first-time buyers. This guidance comes from the Finance Act 2003, section 57B, and Schedule 6ZA. Unless stated otherwise, references will be to paragraphs within that schedule.

Overview of the Relief

This relief is available if you meet the following criteria:

• You purchase a single dwelling.
• The purchase price is £625,000 or less.
• You, as the purchaser, are an individual. If there are multiple buyers, each must be an individual.
• You, or all buyers, must be first-time buyers who plan to live in the property as their main and only residence.
• The transaction date is on or after 22 November 2017.
• The purchase is not linked to any other land transactions, except for land that is part of the property’s garden or grounds.

Conditions in Detail

Let’s break down these conditions:

1. Single Dwelling Purchase
– The relief only applies to the purchase of one residential property.

2. Purchase Price Limit
– The purchase price must not exceed £625,000. This means the total amount you pay for the property, including any additional costs, has to stay within this limit.

3. Purchaser Identity
– The buyer must be an individual, meaning private persons and not companies or organisations. If there are more than one buyer, each one must also be an individual.

4. First-Time Buyer Status
– To qualify as a first-time buyer, you must not have purchased a major interest in a dwelling before. This applies whether you acted alone or with others. A major interest typically means you own or have owned a significant portion of a dwelling worldwide.

5. Date of Transaction
– The effective date of your transaction must be on or after 22 November 2017.

6. Non-Linked Purchases
– The relief cannot be claimed if your purchase is linked to other land transactions. The only exception to this is if the land is part of the garden or grounds of the dwelling you are buying.

Purchases Not Eligible for Relief

There are certain situations where you cannot claim this relief:

• If the purchase falls under higher rates transactions as outlined in paragraph 1 of Schedule 4ZA of the Finance Act 2003. For more information, refer to SDLTM09730+ for guidance on higher rates for additional dwellings.
• If your purchase includes any non-residential land, you are ineligible for the relief.

Defining a First-Time Buyer

To be considered a first-time buyer, you must not previously have owned a major interest in any dwelling or an equivalent piece of land anywhere in the world. This means that if you have ever bought or owned a house, flat, or equivalent type of property, you do not qualify for the relief.

For a detailed explanation of what a ‘first-time buyer’ is, please see SDLTM29845 for the meaning of “first-time buyer”.

Understanding ‘Dwelling’

The term ‘dwelling’ refers specifically to residential properties. This includes houses and flats that people live in. In regard to first-time buyer relief, distinguishing what constitutes a dwelling is essential.

For more information about the definition of a ‘dwelling’, please refer to SDLTM29851 for the meaning of “dwelling” in the context of first-time buyers’ relief.

Examples of How the Relief Works

To illustrate how these rules apply, let’s look at some hypothetical scenarios.

Example 1: A Valid Claim
– Sarah is buying her first home for £300,000. She is an individual, and the transaction date is 1 December 2021. Since she’s a first-time buyer intending to live in the home, she meets all the eligibility criteria. Thus, Sarah can claim the first-time buyer relief.

Example 2: Exceeding the Price Limit
– Tom and Lucy are a couple and wish to buy a flat for £700,000. Although they are first-time buyers, the purchase price exceeds the £625,000 limit. They cannot claim the relief due to this condition.

Example 3: Linked Purchases
– David is purchasing a house and also buying the adjoining plot of land that he plans to use as a garden. Although the house is £500,000 and in his name alone, he cannot claim the relief because the purchase of the plot is considered a linked transaction.

Example 4: Previous Ownership
– Emma is considering her first property purchase but had previously inherited a tough-to-sell family home that she had never lived in. Since she held an interest in that property, even though it was not her primary residence, she does not qualify as a first-time buyer.

Example 5: Multiple Buyers
– Mike and his partner both are first-time buyers intending to buy a home together. If they buy a property priced at £600,000 and meet all other conditions, they can claim the relief, provided each of them has not owned property before.

Final Thoughts on Claiming the Relief

If you believe you meet the conditions described, you should ensure you provide accurate information when applying for the relief. It’s a good idea to gather all necessary documents, including proof of identity and any prior property ownership situations.

Keep in mind, false claims or incorrect information can lead to penalties or having to repay the relief, so it’s crucial to ensure everything is correct before you submit your claim.

For additional questions or to find more detailed information, you can consult the further guidance sections or speak to a tax professional familiar with property transactions and HMRC guidelines.