You are here: Home - Mortgages - First Time Buyer - News -

First-time buyer stamp duty cut: but beware if you’re using a Help to Buy ISA

Written by: Paloma Kubiak
The Chancellor has today unveiled a vote-winning Budget for first-time buyers as he announced stamp duty will be cut for properties up to £300,000. But if you’ve a Help to Buy ISA, don’t get carried away.

From today, stamp duty for first-time buyers for properties up to £300,000, or the first £300,000 for properties worth up to £500,000, will be cut.

This move is expected to cut stamp duty for 95% of all first-time buyers while for 80%, they would pay no stamp duty at all.

As part of Philip Hammond’s first Autumn Budget, he said the measure is expected to help more than a million first-time buyers get onto the housing ladder within the next five years.

This is just one of a number of steps taken by the government to help first-time buyers onto the property ladder amid rising house prices, sky high rents and the rising cost of living fuelled by inflation.

In April this year, the Lifetime ISA (LISA) was launched allowing adults aged 18 to 39 to save up to £4,000 a year where they’ll receive a government bonus of 25% – £1,000 on top. The money can be used to buy your first home worth up to £450,000 nationwide or for retirement, as long as the account holder has held the LISA for at least 12 months.

In December 2015, the government’s flagship Help to Buy ISA scheme launched, available for first-time buyers aged 16 or over, allowing them to save £200 per month (an extra £1,000 in the first month can be deposited) where the government will top it up with a 25% bonus, capped at £3,000.

But if you’ve a Help to Buy ISA and you’re excited about the stamp duty cut, there is a word of caution.

The Help to Buy ISA bonus is only available against the cost of buying a property worth up to £450,000 in London or £250,000 elsewhere.

If you fall into the ‘buying elsewhere’ camp, then be aware that even though the stamp duty cut is available for first-time buyers of properties worth up to £300,000, you will only get the government bonus when buying a property up to £250,000, not a penny more.

If you’re tempted (and able) to buy a property costing between £250,001 and £300,000 and you have a Help to Buy ISA, you won’t get the government bonus, but you will still get the stamp duty cut. Legal professionals should make this clear, but bear this in mind when doing your calculations.

Therefore it may be worth considering transferring your Help to Buy ISA to a Lifetime ISA if you think you are in the market to buy a pricier property (£250,001+) outside London.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week