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UK government considers offering more first time buyer support

In some good news for first time buyers, UK chancellor Jeremy Hunt has been discussing potential ways to offer better support

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 27 October 2023

4 min read

UK government considers offering more first time buyer support

The housing market in the UK has felt unpredictable and chaotic this year, especially for first time buyers who are looking to put their first foot on the property ladder. This is due to factors like increasing interest rates, high inflation and an ongoing cost of living crisis making something like buying home feel overly expensive and out of reach.

In some good news for those looking to buy for the first time, UK chancellor Jeremy Hunt has been discussing potential ways to better support first time buyers. This includes the possibility of extending the current UK mortgage guarantee scheme which helps first time home buyers purchase a property with only a 5% deposit.

We’re happy to see the Conservative government at least discussing steps to help first time buyers in this difficult time in the UK housing market. Ideally, further support being available will both help those wanting to buy their first home and help boost the property market overall.

QUICK SUMMARY – Governments considers offering more first time buyer support

It’s great to see that the government thinking about offering extended support for first time buyers in the UK. It can be tricky to get onto the property ladder for the first time, so any additional support can be a great help and much appreciated.

  • Supporting first time buyers can actually support the UK economy overall, by encouraging economic growth. It also means there can be less reliance on rental properties which have been becoming more expensive over the last year.
  • The initial plans that have been discussed include extending the current mortgage guarantee scheme (which increases availability for 95% mortgages) and developing a new type of cash ISA specifically for first time buyers.
  • If you are thinking of buying a home or investment property for the first time, it can feel overwhelming difficult to understand your best options. something that may be helpful is to speak to a qualified mortgage broker for advice about which mortgages and support are currently available to you.

UK chancellor Jeremy Hunt has discussed the possibility of offering a support package to help first time buyers get on the property ladder. These are initial plans which would be properly discussed and announced in next month’s autumn budget.

Some of the main possibilities that have been mentioned include:

  • Extending the current mortgage guarantee scheme (was due to end in December 2023)
  • Developing a new type of cash ISA (individual savings account) to help support those trying to save a deposit for their first home

Why is it so important to support first time buyers?

Anyone who’s considered buying a home this year may well have been put off by consistently increasing Bank of England interest rates and also variations in house pricing. It’s definitely understandable why people have been more cautious this year, as interest rates are still expected to remain high moving into 2024.

There’s also been a lot of concern around the affordability of homes, as higher interest rates is combined with inflation raising the prices of various centrals like food and electricity. The economic situation in the UK at the moment has meant many people feel it is not the right time for them to commit to a big financial expense like a mortgage.

First time buyers in particular have likely been put off, which is why it’s so important to support them. It can be so difficult to get your first foot on the property ladder and the more people buying homes, the better it is for the property market overall. There will be benefits such as:

  • Better social mobility and financial security
  • A boost to economic growth (much needed with recent inflation) and generates government revenue through taxes
  • Encouraging home ownership for younger generations can help address shifts in housing needs across the country
  • Less reliance on rental properties (which let’s be honest are also becoming far more expensive and less available)

While it’s great to hear that the government are considering extra support for first time buyers, the good news is that that are some systems in place already that can help if these changes don’t happen.

  1. Exempt from stamp duty: if the property you want to buy costs less than £425,000 , first time buyers may be exempt from paying stamp duty land tax – helping them to save on costs
  2. Mortgage guarantee scheme: This was first introduced during the pandemic and is due to end in December 2023 and the scheme has helped encourage the availability of 95% mortgages – so first time buyers only need a 5% deposit for their home.
  3. Shared ownership properties: These are becoming very popular with first time buyers as they allow you to buy a percentage share of a property meaning you need a much smaller mortgage amount.
  4. Local authority schemes: Some local authorities in the UK offer additional support and incentives for first-time buyers, such as low-interest loans or grants to help with the deposit or other home-buying costs
  5. Lifetime ISA (LISA): A Lifetime ISA is another savings account option for first-time buyers. It offers a 25% government bonus on savings, but with a higher annual contribution limit. The funds saved in a LISA can be used towards a first home purchase.

More mortgage and home news

Here’s more of the latest financial news affecting homes and mortgages in the UK.

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