In order to be classed as a first time buyer, you must not have previously owned a property anywhere in the world. If it is a joint purchase, then this must be true for all the buyers. The completion date must be after midnight on 25^th March 2010 (and before 25^th March 2012).

Whilst this may be good news for those at the bottom end of the market, those at the top end of the market are being hit with the increase that will pay for the relief for first time buyers. The rate for properties worth more than £1m will increase from 4% to 5%, although this would not come in until April 2011. This will obviously have a much bigger impact in London and the South-East, than it will elsewhere.

This is estimated to cost Mr Brown around £40m in less tax income in the next year.

The remaining tax bands of 3% from £250,000 to £500,000 and 4% for over £500,000 remain unchanged.

Such high levels of taxation for owning your own home are beginning to cause a shift in the way people move up the property ladder. Instead of steadily moving up, paying Stamp Duty at each step, the high cost of the tax is now causing people to deliberately take large leaps up the ladder, thus avoiding tax on the steps they ‘leap over’.

For more information on Stamp Duty, see our Stamp Duty page in the Buying Section.