Labour wants stamp duty cut to include shared ownership…

Monopoly board

Labour wants to extend a tax cut designed to help people buy their first home to those getting shared ownership properties.

The government abolished stamp duty for thousands of households in its last budget.

But it potentially excludes shared ownership buyers.

Labour’s shadow housing minister John Healey said: “It’s not fair. These are the people that this stamp duty relief should be there for and it isn’t.”

What is shared ownership?

shared ownership

Shared ownership helps people who can’t afford to buy a house outright.

It allows you to buy a share in the house and then pay rent on the rest.

You can then increase your share, by buying more of the house as time goes on.

There are around 200,000 shared ownership properties in the UK.

First time buyers qualify as long as their household earns less than £80,000, or £90,000 in London.

There are some different rules in Northern Ireland and Scotland.

What is stamp duty?

Shared ownership

Stamp duty is the tax you must pay if you buy a house in England, Northern Ireland or Wales.

In its last budget, the government scrapped stamp duty for first-time buyers purchasing a home of up to £300,000.

It also reduced stamp duty for properties costing up to £500,000.

As a result the average first-time buyer would save about £1,700.

Do you pay stamp duty on the shared ownership scheme?

shared ownership

Thousands of first-time buyers using shared ownership scheme may miss out on the stamp duty exemption.

That’s because stamp duty is calculated on the property’s full value, not the share being bought.

So, if you were buying a 50% share in a £500,000 home you would still have to pay stamp duty.

That amount you would have to pay would be £10,000.

This is a particular problem in places with high property prices, like London.

What do Labour want to change?

John Healey

Labour’s housing minister John Healey wants all first-time buyers using the shared ownership scheme to qualify for the stamp duty exemption.

“I want to see them (the government) applying to shared ownership, the same rules as they apply to people buying a full house for the first time,” he told Newsbeat.

“It’s inconsistent. It’s not fair. These are precisely the people that this stamp duty relief should be there for and it isn’t.”

What does the government say?

A sign promoting shared ownership homes

The government argues it already gives “special stamp duty treatment” to shared ownership purchases.

Buyers on the scheme can make a one-off stamp duty payment based on the total value of the property.

Or they can pay stamp duty in stages.

So what does that mean?

Shared ownership

Before the budget, if a first-time buyer wanted to buy a £500,000 house outright they would have to pay £15,000 in stamp duty.

That has now been cut to £10,000.

But a first-time buyer on a shared ownership scheme buying part of a property valued at the same price would also have to pay £10,000 upfront.

That’s despite them only buying a share of the house which could well fall way under the £300,000 stamp duty exemption.

This is a problem for many on the shared ownership scheme who struggle to raise the initial cash for home ownership – such as the deposit and stamp duty costs.