The latest budget announcement has brought several changes that directly impact first-time homebuyers in the UK.

From adjustments in stamp duty thresholds to investments in affordable housing, these developments could significantly influence the affordability and availability of homes for new buyers.

This blog breaks down what these changes mean for you if you’re looking to step onto the property ladder.

Stamp Duty Changes

One of the most notable changes is the adjustment of the stamp duty threshold. Previously, first-time buyers purchasing homes were exempt from stamp duty on properties up to £425,000. However, starting from April 2025, this threshold will be lowered to £300,000. This adjustment means that approximately 20% of first-time buyers will now find themselves liable to pay stamp duty, potentially increasing the upfront costs of buying a home. It’s crucial for prospective buyers to be aware of this change and plan their budgets accordingly.

Impact on Mortgage Rates

The Office for Budget Responsibility (OBR) has highlighted that the recent budget changes could influence inflation rates, expecting a rise to 2.5% this year. This shift is likely to affect mortgage rates, which might not fall as quickly as previously forecasted or might even rise in the short term. Higher mortgage rates translate to higher monthly repayments, making it more challenging for first-time buyers to afford their new homes. It’s important for buyers to monitor these trends and possibly lock in mortgage rates before any significant increases.

Investment in Affordable Housing

On a brighter note, the budget has introduced a positive development for first-time buyers with a £5 billion investment plan aimed at increasing the supply of affordable housing. This initiative promises to enhance the availability of budget-friendly homes, which could help in moderating house price inflation over time. While the actual construction and availability of these homes might take some time, this move is a step in the right direction for easing the housing market’s constraints.

Lifetime ISAs and Savings

Fortunately, the contribution rules for Lifetime ISAs and other ISA accounts remain unchanged. This stability allows first-time buyers to continue saving towards their home purchases in a tax-efficient manner. Furthermore, the government maintains a 25% bonus on savings in a Lifetime ISA, up to £1,000 annually, which is a significant boost for anyone building a deposit for their first home.

The recent budget brings a mixed bag of changes for first-time buyers. While the reduction in the stamp duty threshold may increase the initial costs of purchasing a home, the government’s commitment to funding affordable housing and maintaining beneficial savings schemes offers some relief. As a first-time buyer, staying informed about these changes and understanding how they affect your home buying journey is crucial.

If you’re planning to buy your first home and are unsure how the new budget affects you, speaking to a financial advisor could be very beneficial. At Riviera Mortgages, we are committed to helping you understand the landscape and make the best decisions for your circumstances. Contact us today to discuss how we can support your journey to homeownership in light of the latest financial developments.