First-time buyers get a significant stamp duty discount. After April 2025, you pay 0% on the first £300,000 and 5% on the portion between £300,001 and £500,000. If the property costs more than £500,000, the relief does not apply and you pay standard rates.
On a £300,000 property, a first-time buyer pays zero stamp duty. A non-first-time buyer pays £5,000. That is a £5,000 saving for FTBs. On a £400,000 property, the FTB pays 5% on £100,000, which is £5,000. A non-FTB pays £10,625.
The relief is designed to help people get onto the property ladder. For a young couple buying their first home in Portsmouth, where average prices are around £280,000 to £320,000, the stamp duty saving could be significant.
But the cliff edge at £500,000 matters. If you are buying a property for £501,000, you lose the relief entirely and pay standard rates on the full amount. That leap from £500,000 to £501,000 could cost you an extra £15,000 or more in stamp duty.
If you are a first-time buyer looking at properties near the threshold, consider whether you can negotiate the price down to £500,000 or below. The stamp duty saving might make the difference between being able to afford the property and not.
The formula
If price > £500,000: use standard residential rates
If price ≤ £300,000: SDLT = £0
If £300,001 ≤ price ≤ £500,000: SDLT = (price - 300,000) × 5%
A worked example
£400,000 FTB: (400,000 – 300,000) × 5% = £5,000
Why this matters
First-time buyers save thousands in stamp duty. But the relief cuts off at £500,000. If you are buying near that threshold, negotiate hard. Crossing it costs you far more than the extra pound in purchase price.
If you want to know exactly what a property is worth before you make an offer, Xelox Properties can help. We run the numbers so you do not have to.