How can we help first-time buyers? At this stage it’s a tired question, but one that’s gone largely unanswered.
As the housing market awaits the Autumn Budget, we’re left questioning what it means for first-time buyers, a group that has surprisingly thrived in 2024 despite significant affordability challenges.
With potential changes looming – particularly around Stamp Duty – this Budget could either bolster or hinder their path to homeownership.
The challenges first-time buyers face
For first-time buyers, the hurdles are numerous: soaring house prices, fluctuating mortgage rates, and the ever-present cost of living squeeze.
While there’s been some relief from government schemes, the reality remains that many are struggling to get on the property ladder.
The uncertainty surrounding stamp duty changes, and the potential rollback of temporary benefits, adds another layer of anxiety to an already challenging process.
What does a good first experience look like?
For many, buying a home is the most significant financial decision they will ever make. The first-time buying experience should be empowering, not overwhelming.
It’s about more than just securing a mortgage – it’s about creating a stable foundation for the future.
Ideally, first-time buyers should feel supported by clear, transparent processes and affordable financing options.
When they feel confident in the steps they are taking, they can move forward with a sense of accomplishment rather than stress.
To achieve this, we need to ensure that all schemes aimed at helping first-time buyers—from shared ownership to mortgage guarantees—are truly fit for purpose.
It’s time to reassess how these programs function and ensure they reflect the realities of today’s housing market.
What needs to happen in the Autumn Budget?
One of the biggest challenges for first-time buyers is Stamp Duty, which saw a temporary relief when the threshold was increased from £300,000 to £425,000 in September 2022.
This change provided essential support, but with the benefit set to expire in 2025, the housing market risks becoming even less accessible for those looking to purchase their first home.
Given that the average house price in England reached £305,000 in June 2024, according to the Office for National Statistics (ONS), the previous threshold no longer reflects current realities.
A permanent increase would be a transformative move, encouraging more people to enter the housing market and promoting greater market fluidity.
In this Budget, we urge the Government to reconsider its stance on Stamp Duty, as it disproportionately affects not only first-time buyers but also families seeking to upgrade and older generations hoping to downsize.
While adjustments have been made over the past decade, they’ve failed to address the core issue: Stamp Duty remains a significant barrier to homeownership.
Permanently raising the threshold for first-time buyers would ease the financial burden, allowing them to secure homes more easily and fostering a healthier, more dynamic housing market.
Additionally, Labour’s proposed Freedom to Buy scheme, which promises a permanent mortgage guarantee, is an exciting initiative.
However, we need more clarity on how it will function in practice.
If designed correctly, it could provide long-term stability for first-time buyers that’s missing from previous short-lived schemes.
And help remove some of the unpredictability from the housing market.
Reforming the Lifetime ISA
Another key area that deserves attention is the Lifetime ISA.
This program was designed to help people save for their first home, but the withdrawal penalties and the outdated £450,000 price cap are holding it back.
In an era where house prices have skyrocketed, keeping this threshold unchanged since 2017 is out of step with the realities of today’s market.
Removing penalties and increasing the cap would incentivise more buyers to save confidently for their first home.
Do we need a new Help-to-Buy scheme?
The original Help-to-Buy scheme helped thousands of people onto the property ladder, but the question remains: do we need something new or an overhaul of existing support?
Rather than introducing more piecemeal schemes, we should consider a comprehensive strategy that encompasses both affordability and availability.
Whether that means expanding shared ownership, introducing a revamped Help-to-Buy, or simplifying existing structures, the goal should be clear: making the property ladder easier to access, not more complicated.
Looking ahead
With rising costs and a fluctuating housing market, it’s crucial that the government uses this Autumn Budget as an opportunity to support first-time buyers in a meaningful way.
The focus should be on creating lasting, impactful change—not just temporary relief.
By addressing Stamp Duty, revising the Lifetime ISA, and clarifying the Freedom to Buy scheme, we can ensure that 2024’s momentum for first-time buyers continues well into the future.
We need a housing market that works for everyone, and that starts with giving first-time buyers the support they need to take their first steps.
Nick Hale is CEO of Movera
