Am I first time buyer

oz0707

Am I a first time buyer - I suspect not. Put me out of my misery sharpish.

Never bought a house. Have built myself 2 houses on pieces of land which I have bought (as non-residential). Still in one of them, have previously sold the other.

I think I know the bad news but wondered if any people had experiences otherwise...

00ec25

Q: if you "buy" something, you what....?

A: become an owner.

Q: if you own land with a house on it, what do you own?

A: a house on some land.

Q: How many properties do/have you owned?

A: 2

Q: Is 2 more than 0?

A: ....

Q: am I a FTB for SDLT?

A: No. https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note

Q: Can i get a FTB mortgage?

A: depends on the lender... https://www.moneysupermarket.com/mortgages/first-time-buyers/

Q: can I get a taxpayer funded bung for being first at this ?

A: No https://www.moneyadviceservice.org.uk/en/articles/help-to-buy-homebuy-and-other-housing-schemes

SDLT_Geek

There is more to this question than meets the eye. OP, did you ever live in the house you sold as your only or main residence? If so, bizarrely, you could count as a first time buyer for the purposes of stamp duty land tax if you are buying a house to live in.


Or alternatively are you selling the house you now live in? Will that sale complete before, or on the same day as you complete the purchase of the new house? If so, again strangely you could count as a first time buyer for the purposes of SDLT if you are buying a house to live in!

These odd conclusions come from a close reading of the legislation governing First Time Buyers' Relief for SDLT. It will be in Finance Act 2003/Sch6ZA but is presently in effect by virtue of the Budget Resolutions.


Sch6ZA/para6(1)(a) defines a first time buyer in terms of what was acquired previously. A person is not a first time buyer if they acquired a "major interest in a dwelling". But from what you say you acquired a major interest in plots of land on which nothing had been built. You only built the dwellings later. Is that right? No building work was in progress when you bought the land?


But that is not enough to get you to being able to claim first time buyers' relief. There are other conditions to meet. One of them is at schedule 6ZA para 1(7). Relief cannot be claimed if the higher rates of SDLT are due (also known as the 3% surcharge). That is why I started this posting by questioning if:


(a) You had previously lived in the other house you sold. If so the exception from the 3% surcharge for the replacement of an only or main residence could apply now, so as to get you (if you meet the other conditions) into first time buyers' relief.


(b) You will sell the house you live in now by the time (or on the same day as) you complete your purchase. If so, then "at the end of the day of the transaction" on which you complete the purchase you will only own one dwelling, That gets you out of 3% surcharge territory and gets you (if you meet the other conditions) into first time buyers' relief.

Tom99

[FONT=Verdana, sans-serif]The HMRC policy paper defines a 1st time buyer as an individual who has never owned a residential property and the 1st time buyer declaration for a HTB ISA (which I imagine will be the same for stamp duty) say “I have never owned a dwelling”

[/FONT] [FONT=Verdana, sans-serif]The OP, using these definitions would not be a FTB.

[/FONT] [FONT=Verdana, sans-serif]https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers/stamp-duty-land-tax-relief-for-first-time-buyers[/FONT]

[FONT=Verdana, sans-serif]https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf[/FONT]

SDLT_Geek

Tom99 wrote: »

[FONT=Verdana, sans-serif]The HMRC policy paper defines a 1st time buyer as an individual who has never owned a residential property and the 1st time buyer declaration for a HTB ISA (which I imagine will be the same for stamp duty) say “I have never owned a dwelling”

[/FONT] [FONT=Verdana, sans-serif]The OP, using these definitions would not be a FTB.

[/FONT] [FONT=Verdana, sans-serif]https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers/stamp-duty-land-tax-relief-for-first-time-buyers[/FONT]

[FONT=Verdana, sans-serif]https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf[/FONT]

Correct, according to the HMRC policy paper on the SDLT first time buyers' relief. But the policy paper is wrong in this respect! The HMRC Guidance Note https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note is much better. The guidance in chapter 3 correctly refers to a person who had not acquired an interest in a dwelling, not to a person who previously owned an interest in a dwelling. It lapses a little into inaccuracy in answer to Q15 in Chapter 8. Of course what the legislation says is always more important than guidance. Here is a link to it: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661612/8274_Relief_for_first_time_buyers.pdf


In fairness to the policy paper, there can be very few cases where people have owned a dwelling but did not acquire a dwelling. OP seems to have acquired bare plots and then built two houses. Some people might buy a commercial property and convert it to residential. But there cannot be many people who have done this and never acquired a dwelling.


Also of course if the dwelling owned (but not acquired as a dwelling) is still owned at the time of the new purchase, first time buyers' relief is likely to be overridden by the higher rates of stamp duty land tax for additional dwellings (HMRC call it HRAD, others call it the 3% surcharge). Occasionally the replacement exception can get one out of the higher rates and so perhaps back to first time buyers' relief.


My expertise is on SDLT, so I am only commenting on that. The help to buy rules may well be different.

Tom99

[FONT=Verdana, sans-serif]I agree there is confusion, various government documents refer to 'purchased', 'acquired' and 'owned' as if they mean the same thing.

[/FONT] [FONT=Verdana, sans-serif]The legislation you link to does not, for example, seem to include inherited property unless I have missed that part. However there are many references to past inherited property being a bar to a FTB, including the online stamp duty calculator, so where is that covered in the legislation?[/FONT]

davidmcn

Tom99 wrote: »

[FONT=Verdana, sans-serif]I agree there is confusion, various government documents refer to 'purchased', 'acquired' and 'owned' as if they mean the same thing.

[/FONT] [FONT=Verdana, sans-serif]The legislation you link to does not, for example, seem to include inherited property unless I have missed that part. However there are many references to past inherited property being a bar to a FTB, including the online stamp duty calculator, so where is that covered in the legislation?[/FONT]

We've discussed in previous threads an apparent anomaly in the (draft) legislation - this appears to cover inherited property outside England, Wales and Northern Ireland but only purchased property within E&W&NI

In this Schedule “first-time buyer” means an individual who—
(a) has not previously been a purchaser in relation to a land
transaction the main subject-matter of which was a major
interest in a dwelling,
(b) has not previously acquired an equivalent interest in a
dwelling situated in a country or territory outside England,
Wales and Northern Ireland...

oz0707

SDLT_Geek wrote: »

There is more to this question than meets the eye. OP, did you ever live in the house you sold as your only or main residence? If so, bizarrely, you could count as a first time buyer for the purposes of stamp duty land tax if you are buying a house to live in.

Yes previous house I built was my main residence, later selling it to move to another area. Went into rented after selling this

Or alternatively are you selling the house you now live in? Will that sale complete before, or on the same day as you complete the purchase of the new house? If so, again strangely you could count as a first time buyer for the purposes of SDLT if you are buying a house to live in!

I had not planned to sell and complete on or before potentially buying a new house. Obviously though that may change if it is saving me upwards of 15k in stamp.

These odd conclusions come from a close reading of the legislation governing First Time Buyers' Relief for SDLT. It will be in Finance Act 2003/Sch6ZA but is presently in effect by virtue of the Budget Resolutions.


Sch6ZA/para6(1)(a) defines a first time buyer in terms of what was acquired previously. A person is not a first time buyer if they acquired a "major interest in a dwelling". But from what you say you acquired a major interest in plots of land on which nothing had been built. You only built the dwellings later. Is that right? No building work was in progress when you bought the land?

Correct I only acquired land previously, applied for permission then built my main and only house (twice)


But that is not enough to get you to being able to claim first time buyers' relief. There are other conditions to meet. One of them is at schedule 6ZA para 1(7). Relief cannot be claimed if the higher rates of SDLT are due (also known as the 3% surcharge). That is why I started this posting by questioning if:


(a) You had previously lived in the other house you sold. If so the exception from the 3% surcharge for the replacement of an only or main residence could apply now, so as to get you (if you meet the other conditions) into first time buyers' relief.

I did previously live in that house.


(b) You will sell the house you live in now by the time (or on the same day as) you complete your purchase. If so, then "at the end of the day of the transaction" on which you complete the purchase you will only own one dwelling, That gets you out of 3% surcharge territory and gets you (if you meet the other conditions) into first time buyers' relief.
As above, this may change my plans slightly

Many thanks for all your interesting replies. Just trying to get my head around the last bit. Relief cannot be claimed if the higher rates are due - this means I cannot own another residential property on the day my theoretical purchase would complete? If so then what does what happened with my first house that I built then sold some 5+ years ago have to do with.

I was sure I wouldn't be but put this question out there as I hoped to receive a reply like this to get me interested!

oz0707

For the record I am only interested in SDLT. I don't have an FTB ISA

Does this also mean purchase price has to be below 500k outside London.

oz0707

Are we saying the guidance in the link is wrong then because quote from chapter 3 - In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world.
Equivalent interest in land would rule me out?

But then the other link is correct as the implementation states -
“First-time buyer”
6 (1) In this Schedule “first-time buyer” means an individual who—
(a) has not previously been a purchaser in relation to a land transaction the main subject-matter of which was a major
interest in a dwelling,
(b) has not previously acquired an equivalent interest in a dwelling situated in a country or territory outside England, Wales and Northern Ireland,
(c) has not previously been, or been one of the persons who was, “the person” for the purposes of section 71A or 73 in a case where the main subject-matter of the first transaction within the meaning of the section concerned was a major interest in a dwelling, and
(d) would not have been such a person for those purposes in such a case if the provisions mentioned in paragraph (c) had been in force, and had had effect in the country or territory concerned at all material times (subject, where required, to appropriate modifications).

SDLT_Geek

oz0707 wrote: »

Just trying to get my head around the last bit. Relief cannot be claimed if the higher rates are due - this means I cannot own another residential property on the day my theoretical purchase would complete? If so then what does what happened with my first house that I built then sold some 5+ years ago have to do with.

Yes, first time buyers' relief is not available if the higher rates of SDLT are due. I had set out two alternative ways in which your purchase might escape the higher rates. Either one of them will do.


(a) That you get within the replacement exception to the higher rates. From what you say, perhaps you do, as you have entirely disposed of a dwelling which you used to live in as your only or main residence.


(b) That you own no other properties on the day of completion of your purchase.


If you come within (a) then you do not need to sell your existing house to come within (b).


But tread carefully. There could be other complicating factors. Are you buying jointly with someone else? Each joint buyer (and we look through to beneficial ownership usually) has to qualify as a first time buyer.


Also if you have a spouse or civil partner the higher rates of SDLT can come and bite you still. For example if you have a spouse who owns a property at the date of completion of your purchase and will not benefit from the replacement exception then the higher rates override first time buyers' relief.


It would be lovely if I have given you a nice Christmas present, but the devil is in the detail. You will need specialist advice.