There’s some good news for first time buyers that came out of this year’s budget review.
More help for first-time buyers is being offered to make it that bit easier to get on the property ladder.
Keeping track of all the new developments can be confusing, and to be honest, a bit dull. That’s why we’ve picked out the most important updates for you.
So, what does the 2018 budget mean for first time buyers?
The help to buy scheme is being extended
There are two big ticket items for first time buyers in Philip Hammond’s new budget announcement. The first, is that the Help to Buy Equity scheme has been extended by two years.
This scheme loans buyers 20% of the property value to which they add their own savings to reach 25%, borrowing the remaining 75% from the bank. In London, higher house prices mean that buyers are loaned up to 40% if the purchaser can come up with 10% of the value.
The government has lent some £22 billion so far since this scheme was first launched in 2013, but from 2021 it will be offered exclusively to first time buyers up until 2023.
These equity ‘loans’ are free for the first five years and only paid back when the property is sold. However, this will now be limited to homes with maximum, capped values depending on where buyers live.
Here’s the full list of equity price caps by area:
- North East £186,100
- North West £224,400
- Yorkshire and The Humber £228,100
- East Midlands £261,900
- West Midlands £255,600
- East of England £407,400
- London £600,000
- South East £437,600
- South West £349,000
Say goodbye to stamp duty
The second reason for first time buyers to get excited, is that the decision to scrap stamp duty has been extended to shared ownership properties.
First time buyers purchasing a home via the government’s shared ownership scheme won’t have to pay stamp duty on their purchase. The change applies to all homes bought for £500,000 or less and is to be back-dated to include any purchases after 22nd November 2017.
This decision was made to clear up an oversight from Philip Hammond’s previous budget announcement. Last year, Hammond revealed stamp duty would be abolished for first timers buying homes of up to £300,000. A big help for first time buyers!
However, Hammond’s advisors at HM Treasury framed the rules so that those buying a share of a £500,000 home would pay the duty as if they were buying the whole property.
For example, someone paying £150,000 for a 30% share in a new home valued at £500,000 until now had to pay £10,000, or 5% of the value of the property over £300,000.
This requirement has now been abolished. So, when someone buys between 25% and 75% of a home and rents the rest, they are no longer required to pay stamp duty.
You might be one step closer to buying your first home!
These exciting developments are great news for those looking to buy their first property.
If you are thinking of taking the plunge, make sure you do your research first. Take a look at our step-by-step guide for first-time buyers, which tells you all you need to know about becoming a homeowner.