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Stamp Duty Abolished For First Time Buyers


After weeks of speculation about the Autumn Budget, the fiscal facts are finally on the table. Philip Hammond has just finished laying out his plans to the House of Commons, and here at Habito we’ve been keeping a very close eye on the action. All in all, the Chancellor’s Budget speech paints a hugely positive picture if you’re looking to buy your first home. Read on and find out why.

Massive savings on stamp duty

Thanks to rocketing property prices, particularly in London and the South-East, stamp duty has been raking in massive revenues for the government but also helping to stall the UK housing market. The proportion of first-time buyers liable for the tax has risen from 47% in 2001 to a whopping 78% in 2017 – and that figure jumps to 100% in London. As a result, first-time house-hunters have been shying away from getting on the property ladder and empty-nesters have been staying put instead of downsizing to free up family homes.

What has the Chancellor promised?

The Chancellor has come up with a surprisingly sweet carrot to get young people to swap ‘Generation Rent’ for ‘Generation Own’. He has announced that, from today, first-time buyers will pay zero stamp duty on properties up to £300,000. For homes between £300k and £500k, first-time buyers will save £5,000 in stamp duty.

Pre-Budget, properties under £125,000 were exempt, but the average purchase price among first-time buyers in the UK stands at £207,693 – and £410,000 in London. So, the £1,700 you would have to stump in stamp duty on your £210,000 dream home will now be absolutely nothing! Good news for Londoners, who will save £5,000 in tax on a £410,000 home, paying just £5,500 in stamp duty. The new rules mean a stamp duty cut for 95% of first-time buyers, with 80% paying no stamp duty at all.

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More land for new homes

The UK is in the middle of a housing crisis, with a chronic shortage of new homes being built each year, and Communities Secretary Sajid Javid piled on the pre-Budget pressure for the Chancellor to ‘think big’ and ring-fence £50 billion of public money for new homes. The benefits of getting Britain building again are clear – an influx of new homes would help to ease the housing crisis and rein in spiraling property price increases, allowing more first-time buyers to get a foot on the property ladder.

What has the Chancellor promised?

Mr Javid’s pleas have been answered by the Chancellor, who has committed £44 billion to provide funding, loans and guarantees over the next five years to boost the UK’s housing stock. He told Parliament that the crisis needed ‘money, planning reform and intervention’, so how will the £44 billion figure break down? Money to deliver 300,000 new homes each year by the mid-2020s (up from the current 217,000), training young construction workers and guaranteeing loans for small house-builders to get their hard hats on pronto. The Chancellor also announced planning reform to free up more urban brownfield sites for residential development, and intervention on the vast number of planning permissions currently left unbuilt. But one thing not to expect is flats in fields – the Green Belt will remain gloriously green.

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Help to Buy scheme extended

Aimed at young house-hunters, Help to Buy launched in 2013 and allows you to buy a new-build property with just a 5% deposit – the government lends 20% of the sale price and you borrow the rest via a repayment mortgage. The scheme has been hugely popular and already accounts for more than a quarter of all new-build sales in the UK, 81% of which are to first-time buyers.

What has the Chancellor promised?

The Tories are targeting the young vote, and Theresa May already used the Tory Party conference in October to announce a government injection of a further £10 billion into the Help to Buy scheme, allowing another 135,000 people to buy a new-build home by 2021. The Chancellor used his Budget speech to reconfirm that figure – but where all that extra money’s going to come from is yet to be revealed.
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Habito’s point of view

The Chancellor’s pre-Budget intentions were clear: “We will not allow the current young generation to be the first since the Black Death not to be more prosperous than its parents’ generation. Fixing the housing market is a crucial part of making sure that doesn’t happen.” Strong words indeed, and Philip Hammond has followed through with a wide range of homebuyer reforms that mean it’s a brilliant time to put your foot on the property ladder. Stamp duty cuts, new-build investment and a boost for Help to Buy will all help the housing market back to good health.

Kala, our VP Operations, recommends you chat to our friendly team of mortgage experts sooner rather than later:

Today’s stamp duty reforms will turbocharge the first-time buyer market, allowing people to save thousands and put more money towards a deposit, giving them access to a wider range of mortgages. However, it is also likely that house prices will rise, as there could be a rush to take advantage of this tax change on houses below the £500,000 threshold.

The number of properties bought and sold from now until January is usually low. But with the increase to the base interest rate by the Bank of England this month, as well as continued competitive prices on offer from mortgage lenders, it’s likely we’ll see a boost in house buying, based on first-time buyers rushing to take advantage of this change to stamp duty.”

So stop dreaming and start doing your sums, and hop on to live chat to speak to one of our mortgage experts. Habito is here to help you every step of the way towards mortgage bliss, and there’s no better time to start your journey with us!

Learn more about Habito & find out how much you can borrow online today →

Comments (4):

  1. Gurmukh Panesar

    November 22, 2017 at 3:41 pm

    Any news on if the Help to Buy ISA upper limit has increased from £400,000?

  2. Anne Rigby

    November 22, 2017 at 6:00 pm

    My daughter has just just bought a house and is moving in a week but has not paid the stamp duty yet ,will she still have to pay it ?

  3. Tina LePoidevin

    November 22, 2017 at 6:22 pm

    I am waiting for my house to be finished and hopefully move in in late Dec/Jan wil i still have to pay stamp duty?

  4. Kwesi

    November 22, 2017 at 8:40 pm

    What’s the stamp duty for first time buyer on property valued at £635,000?


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