Buying your first home is one of the biggest financial steps you will take. Alongside your deposit and mortgage, Stamp Duty Land Tax (SDLT) is one of the largest upfront costs to plan for. Understanding exactly how it works helps you avoid surprises before completion.
What is SDLT and who pays it?
SDLT is a government tax charged on property purchases in England and Northern Ireland. As a first-time buyer, you benefit from a relief that reduces or eliminates this cost depending on the purchase price. The rules that took effect from 1 April 2025 remain in place for 2026, so it is worth knowing where you stand before making offers.
Under the current relief:
- Properties up to £300,000: no SDLT to pay
- Properties between £300,001 and £500,000: 5% on the portion above £300,000
- Properties above £500,000: standard rates apply and first-time buyer relief is lost
For example, if you buy a home for £400,000, your SDLT bill would be £5,000, charged on the £100,000 above the threshold.
Why London buyers often pay more
The relief disappears once the purchase price exceeds £500,000, at which point standard rates apply across the full amount. This is where London's property market creates a specific challenge, as the average London property cost £542,000 in March 2026. Many first-time buyers in the capital fall above the ceiling and lose eligibility for relief.
Properties closer to that threshold still attract SDLT. On a £499,000 home, you would owe £9,950, with 5% applied to the £199,000 above the nil-rate band. However, if the price nudges just over £500,000, standard rates take effect and the bill rises sharply. This is one of the less obvious pressures London buyers face.
Common misunderstandings about the stamp duty exemption
The relief does not apply automatically. Your solicitor claims it on your behalf when submitting the SDLT return, so it is worth confirming this is in hand before completion. Buyers must be genuine first-time buyers with no previous property ownership anywhere in the world, including inherited property. If one partner has ever owned a home, the relief is lost for both.
Other costs to budget for
SDLT is not the only upfront cost. Conveyancing fees in London typically range from £1,500 to £3,000 or more, depending on the complexity of the transaction and whether the property is leasehold. Surveys, searches, and mortgage arrangement fees all add to the total, making a realistic budget essential.
At Moneysprite, based at 100 Bishopsgate in the City of London and working with buyers across southern England, we help first-time buyers understand the real cost of purchasing in the capital. Moneysprite has been supporting clients with mortgage and financial planning since 2000.
Get in touch with the team at Moneysprite today, and we will help you build a clear picture of every cost before you commit.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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