Homebuyers urged to do nine things to save £2,500 in tax this year

With just 84 days until the next hike, one lender is urging those wanting to buy their first home to get their ducks in a row to avoid an average tax hike of £2,500.

Coventry Building Society, said there are nine things first time buyers can do now to make sure their property purchase goes through before the deadline on 31 March.

On 1 April new Stamp Duty Land Tax (SDLT or Stamp Duty) rates will take effect and are expected to impact first-time buyers the most.

First-time buyers pay no stamp duty when buying a home worth £425,000 or under, but this will drop £300,000, meaning they will go from paying nothing to paying £6,250 in stamp duty.

Coventry Building Society said the the tax bill on an average priced home will jump by £2,500, with the nil-rate thresholds for home movers dropping from £250,000 to £1,250,000.

The nil-rate thresholds for first time buyers are dropping from £425,000 to £300,000.

Anyone buying in the UK#’s most expensive area, London where the average first time buyer spends £455,923 will see their bill shoot from £1,546 to £7,796.

Jonathan Stinton, head of Relations at Coventry Building Society, said: “Buying a home can be one of the most stressful things people do, an expensive deadline only ramps up the stress.

“It’s going to be a busy few months for buyers, sellers, and everyone connected to the process as people race against time to save themselves thousands of pounds in tax. Not every part of the process is going to be in your hands, but staying organised, seeking expert help, and acting quickly will hopefully reduce some of the stress and help people get their keys ahead of the deadline.”

1. Know what you can afford.

If you haven’t found a house yet, you’re going to need to act very fast to have a chance at beating the deadline. The first step is knowing what you can afford. A broker will be able to help you work out how much you can borrow and secure a in principle. This will help you act quickly when you find the right property and give you credibility as a buyer when you make your offer.

2. Have paperwork at the ready.

Lenders will want to see proof of your income and identification before they offer you a . It varies from lender to lender, but you may be asked for latest payslips and P60, or latest accounts or tax returns if you’re self-employed.

Bank statements aren’t always requested, but if they are it’s likely the lender will ask for original copies rather than ones printed at home. Ask your bank for these a few weeks in advance to make sure they arrive in time for when you might need them.

3. Make sure you’re registered to vote.

It may sound strange – but making sure you’re registered on the electoral roll at your current address will help lenders verify your identity quickly and easily. It could go a long way in helping your application move more swiftly.

4. Choose the right conveyancer

A good solicitor or conveyancer can make all the difference. Don’t just look at the price, consider their efficiency too. Look for someone with experience handling tight deadlines. In these circumstances, paying a little more in legal fees for someone who can process your paperwork quickly could save you thousands in tax.You can even speak to a solicitor before you’ve found a property – they can start some of the checks on your identity while you’re still finding your home. It’s likely they’ll need photo ID and address ID – so check with them if they need originals, or if certified copies are acceptable.

5. Arrange surveys and valuations early

As soon as your offer has been accepted, it’s a good idea to book any surveys and valuations straight away. These are essential steps in the process and can take time, so the sooner they are arranged the better.

6. Sort your deposit.

Tell the solicitors straight away if your deposit is being gifted by a family member – this type of deposit requires further checks, so the solicitors ideally need to start working on it as soon as possible. If your deposit is sitting in a bank account you may need to provide original copies of bank statements, and for certain types of account you may also need to give notice to withdraw the money – being prepped for these things will help avoid delays down the line.If your deposit is coming from the sale of your existing home, you may need to provide a recent statement or something from your existing lender, so have this paperwork ready to go.

7. Get buildings insurance.

Your lender will want to see that the property is insured before the mortgages goes through – arranging the buildings insurance promptly will help avoid any last-minute hold-ups. You may also want to get any other insurances in place too – like life assurance or critical illness.

8. Understand the Stamp Duty rules

It’s important to know what’s changing and how your Stamp Duty bill could be impacted so you can be prepared for all scenarios.Before 31st March home movers start paying Stamp Duty on properties over £250,000 – but from 1st April this drops to £125,000, meaning if you’re buying an averaged priced home at £308,782 your bill will go from £2,939 to £5,439.

First time buyers pay Stamp Duty on purchases over £425,000 before the March deadline, but from April 1st this drops to £300,000.

To qualify as a first time buyer you can’t have owned property in the past, and if you’re buying jointly with a non-first time buyer you won’t be able to claim any first time buyer relief and will pay Stamp Duty at normal rates.

The same principle applies for anyone buying a second property – for example, someone named on a family home buying a property with a new partner will have to pay the additional property surcharge even if it is the sole property for one of the buyers.

9. Something for sellers.

If you’re selling your home you may be thinking about the Stamp Duty on your next purchase – but you may also need to think about potential implications for the home you’re selling too. If your buyers aren’t prepped for the deadline they may try to pull out of the sale last minute, or attempt to renegotiate the price. Keep that in mind and think about what you would do if that situation arose – if you aren’t prepared to adjust your selling price, you may need to risk losing the buyer and starting the process again.