Budget Falls Short for First-Time Buyers

The recent Spring Budget left many aspiring homeowners disheartened, as it failed to address several key concerns for first-time buyers. Contrary to expectations, there were no updates on Lifetime ISAs, no new schemes to replace Help to Buy, and no adjustments to Stamp Duty thresholds. This was a letdown for many who had hoped for more substantial support.
In the lead-up to the Budget, the Chancellor had already abandoned plans for 99% loan-to-value (LTV) mortgages, which would have allowed first-time buyers in Leeds to secure a home with just a 1% deposit, backed by government guarantees. The banking sector had voiced concerns about potential defaults, leading to the scheme’s cancellation.

Diverse couple browsing internet to buy decor on laptop, buying home furniture on online shopping to decorate living room apartment. Moving in rented household property together. Tripod shot.

Silence is Deafening

Criticising budget, Coventry Building Society’s Jonathan Stinton said the silence around housebuilding was deafening, adding that the Budget, “could have been an opportunity to present new innovative schemes which help buyers with aﬀordability as well as saving for a deposit –even bare minimum wasn’t done. It’s not only incredibly disappointing; it feels like a big mis-step on the Chancellor’s part. The rest of the housing market is built on the shoulders of first-time purchasers. The rest of the market will not benefit if we do not provide them with adequate assistance.”

Tim Bannister from Rightmove echoed this sentiment, expressing disappointment that the government did not seize the chance to reform Stamp Duty. He pointed out that temporary Stamp Duty thresholds were not made permanent, which could lead to higher costs for buyers in the coming year who have found the best mortgage rates in UK unless changes are made later.

Other budget measures
Although housing related measures have been addressed in the Budget, bigger implications can be seen for private landlords and second homeowners rather prospective buyers:

• The higher rate of Capital Gains Tax (CGT) has been reduced from 28% to 24% and the lower rate of CGT has been maintained at 18%. It’s important to note that only second and vacation residences are subject to CGT; your primary residence is exempt.
• There will be no further deduction of mortgage interest from rental income or reduced capital gains tax (CGT) for second homes who sell their properties under the Furnished Holiday Lettings (FHL) tax system.
• The Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT) will come to an end on June 1, 2024, in both England and Northern Ireland. However, it remains uncertain whether the Scottish and Welsh governments will follow suit with changes to their own reliefs under the Scottish Land and Buildings Transaction Tax (LBTT) and the Welsh Land Transaction Tax (LTT).
Your home may be repossessed if you do not keep up repayments on your mortgage.