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Stamp duty for first-time buyers 2021

Stamp duty for first-time buyers 2021

One major aspect of buying a home that can confuse first-time buyers is stamp duty.

Essentially a tax that’s paid when you buy a home, there have been a host of changes to stamp duty that first-time buyers should be aware of – and potentially more to come for those buying in 2021.


Do first-time buyers pay stamp duty?

First-time buyers are not completely exempt from paying stamp duty – but the amount you have to pay depends on the price of the property you’re buying.

Until stamp duty rates were changed in July 2020, first-time buyers paid no stamp duty on the first £300,000 of their property’s purchase price.

However, since July, and until March 31, 2021, first-time buyers are exempt from stamp duty on the first £500,000 of a property’s purchase price.


Who qualifies as a first-time buyer?

A first-time buyer is someone who has never purchased a property before.

As well as main residences, first-time buyers must also have never bought an investment property or inherited a home from relatives.

If you’re buying a property with someone else, both of you must be classed as first-time buyers in order to qualify for any stamp duty relief.


First-time buyer stamp duty relief: The current rates and what you could save

Under the current stamp duty rates, which are in place until March 31, 2021, you can make substantial savings as a first-time buyer if the property you’re buying costs more than £300,000.

The current stamp duty rates are:


Purchase price amount

Stamp duty rate

First £500,000


£500,001 - £925,000


£925,001 - £1.5million


Amount above £1.5million



Those rates mean first-time buyers could make the following savings if they can complete before March 31, 2021:


Purchase price

Saving until March 31, 2021

Up to £300,000









Is the stamp duty holiday for first-time buyers only?

Stamp duty rules brought in during July 2020 are for all buyers in England.

Those buying investment properties or second homes, however, will still pay a 2% surcharge under the rates.


What effect has the stamp duty holiday had on property prices?

Despite the coronavirus pandemic, price growth throughout the UK was healthy in 2020, according to Rightmove’s December House Price Index.

Nationally, property prices grew by 6.6% in 2020, with Rightmove forecasting growth of 4% in 2021 as the UK continues to recover from the pandemic.

Annual growth in other areas of the UK, however, exceeded that national figure:


North West

Annual growth: 10.6%


North East

Annual growth: 9.1%


Yorkshire & Humber

Annual growth: 8.8%


East Midlands

Annual growth: 7.1%


West Midlands

Annual growth: 8.1%



Annual growth: 8.2%


Will the UK stamp duty holiday be extended?

No plans have been put in place to extend the current stamp duty rules beyond March 31, 2021 – although there have been calls to do so from certain quarters.

Should the stamp duty rules revert back to previous rates, first-time buyers would have to pay the following:


Purchase price amount

Stamp duty rate

First £300,000


£300,001 - £500,000



Rates thereafter are the same as non-first-time buyers.


Will first-time buyers need bigger deposits?

With property prices having risen in 2020 and the number of mortgage products on offer reduced due to the Covid-19 pandemic, first-time buyers could need larger deposits to get on the property ladder in 2021.

However, the Help to Buy scheme remains open to first-time buyers, who’ll need only a 5% deposit to go alongside one of the scheme’s equity loans.


How to beat the stamp duty deadline

With stamp duty set to return to pre-July 2020 rates from April 1, 2021, the race is on for buyers to complete before the March 31 deadline.

One way for you to beat the deadline as a first-time buyer could be to buy at auction.

Auction sales have fixed timeframes for completion, meaning it’s possible to get the keys to your new home in little over one month.

Our guide to buying at auction explains everything you need to know.


Further reading…

The cost of buying a home isn’t solely what you pay for your property – there are a whole host of other expenses you should be aware of, too.

And if you’re a first-time buyer looking to get on the property ladder in 2021, take a look at these UK hotspots.