Lender urges government to keep current stamp duty threshold for first-time buyers
First-time buyers are hoping the UK government will introduce greater support in the upcoming Autumn Budget to help them enter the property market.
According to recent research from saving and investing app Moneybox, which surveyed 4,000 aspiring first-time buyers and 500 recent buyers, 76% of prospective buyers believe the government should take more action to assist them in purchasing their first homes.
Key suggestions include building more affordable housing, reducing council tax for first-time buyers, and introducing financial incentives for developers and sellers to prioritise first-time buyers.
The research also highlights the importance of the Lifetime ISA (LISA), a savings product introduced in 2017 that has helped over 227,000 people buy their first home. However, there are growing calls to update LISA rules, with 53% of respondents supporting an increase in the property purchase price cap to reflect rising house prices and 34% advocating for the reduction or removal of the government’s withdrawal penalty on unauthorised use of the LISA.
Brian Byrnes (pictured left), head of personal finance at Moneybox, emphasised that future-proofing the LISA could offer a practical solution without significant cost to public finances. He noted that enhancing the LISA would continue supporting first-time buyer in building wealth through homeownership, a key goal of the Labour government’s manifesto.
“The government no doubt has some very difficult decisions to make,” Byrnes said. “There’s no one-size-fits-all solution to address the issues facing the UK housing market, and it will no doubt require a range of tailored responses from both the government and the industry.
“However, we believe there are still some near-term pragmatic measures the government can introduce to give first-time buyers some positive news this budget, without incurring significant costs to the public finances.”
Meanwhile, specialist lender Aldermore is calling on the government to maintain the current stamp duty exemption threshold for first-time buyers, which is set at £425,000.
According to Aldermore’s First Time Buyer Index, over half of prospective first-time buyers want the threshold raised, while 13% of recent buyers said stamp duty costs were the hardest part of the buying process.
Jon Cooper (pictured right), director of mortgages at Aldermore, warned that lowering the exemption threshold to £300,000, as speculated ahead of the Budget, would exacerbate affordability challenges.
“The average cost of a house in the UK is £371,958 and in London this rises even further, so if the exemption falls back to £300,000, a reduction in stamp duty exemption will add further pressures to what is already a costly homeownership journey,” Cooper said.
“First-time buyers are desperate for more support to help them get on the property ladder, and while there is no silver bullet, keeping the threshold at the current £425,000 will make a considerable difference to many.”
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