Budget overlooks first-time buyers

It was a disappointing Spring Budget for anyone looking to get onto the housing ladder. There was a distinct lack of announcements concerning Lifetime ISAs (contrary to expectations), no replacement for Help to Buy and no changes to Stamp Duty thresholds, a disappointment for many.

Just a few days ahead of the key fiscal event, the Chancellor had already scrapped plans for 99% loan-to-value (LTV) mortgages for first-time buyers following resistance from the banking community.

The scheme would have seen home buyers able to put down a 1% deposit on a new first home, with the government backing the overall loan, but bankers warned it would push up defaults.

A deafening silence

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 – but not even the bare minimum was done. It’s not only incredibly disappointing, it feels like a big mis-step on the Chancellor’s part. First-time buyers are the foundation on which the rest of the housing market stands. Failing to give them proper help is failing to help the rest of the market.”

Rightmove’s Tim Bannister said, “We had hoped the government would seize the opportunity to help first-time buyers and reform the outdated Stamp Duty system today. Instead, home-movers were left with extremely little and the temporary Stamp Duty thresholds weren’t even made permanent, meaning more will pay higher rates of Stamp Duty next year, unless the government makes them permanent in the autumn.”

Other measures to be aware of

There were some housing measures announced in the Budget, but these have bigger implications for private landlords and second homeowners rather than for aspiring and current homeowners:

• 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 worth noting that CGT is not payable on your main home, only on second/holiday homes.
• The Furnished Holiday Lettings (FHL)tax regime is to be abolished – second homeowners can no longer deduct mortgage interest from their rental income or pay lower CGT when they sell
• In England and Northern Ireland, Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR) will be abolished from 1 June 2024. It remains to be seen whether the Welsh and Scottish Governments will follow suit in relation to similar reliefs that apply in respect of Welsh Land Transaction Tax (LTT) and Scottish Land and Buildings Transaction Tax (LBTT).

Your home may be repossessed if you do not keep up repayments on your mortgage.