Introduction
On 30th October, Chancellor Rachel Reeves gave no indication that the government would extend the current stamp duty threshold for first-time buyers (FTBs), which is due to expire in March. This scheme sees first time buyers pay no stamp duty on home purchases below £425,000, an increase from the previous £300,000, although this will revert to the original limit in April 2025.
It was revealed earlier this month that stamp tax receipts from April to September 2024 reached £8.6 billion, marking a £0.9 billion increase compared to the same period last year.
Although no extension to the first-time buyer stamp duty threshold was announced, Reeves disclosed that stamp duty on second homes and investment properties will rise from 3% to 5%, effective from 31st October.
Reeves also stated: “In our manifesto we committed to reforming stamp duty land tax to raise revenue while supporting those buying their first home…This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years.”
While many FTBs will still qualify for stamp duty-free purchases if they stay within the earlier £300,000 threshold, many current homeowners won’t be as fortunate.
Existing buyers purchasing properties over £250,000 will face the maximum tax increase, adding an extra £2,500 to the already substantial costs of buying and owning a home.
The government’s decision not to extend current stamp duty exemptions for primary residences will inevitably trigger a surge of transactions as buyers rush to complete before the March 31, 2025 deadline—a scenario that conveyancers are already preparing for.
What does the Budget mean for first-time buyers?
There’s encouraging news in the Budget for first-time buyers. The Chancellor has committed to a £5 billion investment plan to boost affordable housing supply, which, once built, should increase options for first-time buyers and help stabilise house price inflation. Fortunately, contribution rules for Lifetime ISAs and other ISA accounts remain unchanged, allowing aspiring homeowners to save tax-free. Plus, first-time buyers can still benefit from the 25% bonus, up to £1,000, by saving with a Lifetime ISA.
What about Help to Buy ISAs?
The Autumn Budget 2024 did not alter the contribution rules for Help to Buy ISAs (now closed to new applicants). The government will continue to provide a 25% top-up (up to £3,000) when someone uses a Help to Buy ISA to purchase their first home, with the bonus available until November 2030.
Would you like to find out more? Get in touch
Did you know that your benefits package includes complimentary independent mortgage advice? For more details, please reach out to Jonathan Birkett, our Equity Release and Mortgage Adviser. Whether you’re a first-time buyer or looking to secure the best re-mortgage rates, Jonathan is available to discuss your needs via email at jonathan.birkett@pkgroup.co.uk or by phone at +44 (0)20 8334 9953.
PK FINANCIAL PLANNING LLP is authorised and regulated by the Financial Conduct Authority (‘FCA’), 12 Endeavour Square, London E20 1JN. Your home is at risk if you do not keep up repayments on a mortgage secured on it.
