UK Finance, which represents the UK’s banking and financial services sector, is calling on the government to make the current stamp duty break for first-time buyers permanent.
Right now, first-time buyers are racing against the clock. They currently pay no stamp duty on purchases under £425,000, thanks to a temporary cut made by the previous government in 2022. But that tax break is set to run out next March, after which FTBs will have to pay 5% stamp duty on the portion of their purchase between £300,000 and £500,000. They will also pay regular stamp duty if their first home costs over £500,000, down from £625,000 at the moment.
But UK Finance wants the FTB tax break to be left in place – saving FTBs £5,000 on a £400,000 home purchase. They also called for stamp duty bands to be increased in line with the UK House Price Index every year, preventing homebuyers from being pulled into higher bands simply due to rising house prices.
Their idea is actually quite modest compared to other critics of the tax. Economists say that it puts people off moving house, and earlier this year the Organisation for Economic Cooperation and Development (OECD) called on the UK government to scrap it completely.
But with the government claiming that there is a £22bn “black hole” in the Budget, they are unlikely to extend a temporary tax cut – much less scrap a tax that raised £15.4bn in 2022-23.
And adjust the LISA cap too?
Cutting stamp duty isn’t the only FTB-budget-boosting idea being put before the government. Finance company Plum is calling on the government to boost the property price cap for Lifetime ISAs. LISA savers get a significant top-up from the government, but the catch is that LISA funds can only be used to buy a property costing £450,000 or less – and if it isn’t used for a first home or retirement, savers have to give back all the extra cash and then some. The price cap hasn’t been adjusted since 2017, and buyers in London and many areas of the South East will struggle to find a qualifying property.
Other homebuying news
Cheap mortgages are over – Lloyds Bank – Mortgage Introducer
Average first-time buyer paying £350 more than in 2019 – FT Adviser
Home movers ‘pause’ ahead of the Budget – Today’s Conveyancer
