The number of local areas in England where the average first-time buyer home will face stamp duty will almost quadruple overnight from 8.4% to 32.0% on 1 April, Skipton Group’s home affordability index reveals.
The stamp duty threshold for FTBs in England will fall from £425,000 back to £300,000 in April, adding £6,250 to the cost of buying a first home worth £425,000.
Skipton’s index also found that there could be further affordability challenges for aspiring FTBs when it comes to Lifetime ISAs (LISA).
The group’s forecasts show that by the end of 2027 the fixed LISA house purchase limit of £450,000 will fall below the average FTB property price in more than one in 10 British local authorities.
This means a large number of LISA savers will be unable to use the product to buy their first home and unable to access their savings without incurring the government’s 25% withdrawal penalty.
Research from Skipton shows that almost 90% of potential FTB across Great Britain cannot afford to buy a first-time home in their local area based on their personal financial situation.
Six of the 10 least affordable areas for FTB can be found in Wales whereas Scotland dominates the most affordable areas, with only Manchester City bucking this trend.
In Aberdeen City, which is the most affordable local authority area across Great Britain, three in 10 potential FTBs can take the first step on the property ladder. However, this drops to just three in 100 in Ceredigion, the least affordable.
While home affordability has seen an improvement since the start of the decade, only 7.8% of households with earnings below £23,400 can afford to take the first, or next step, on the property ladder in their local areas.
In the most affordable local authorities, potential FTBs are around eight times more likely to be able to take the first step on the property ladder than those in the least affordable
Skipton Group chief executive officer Stuart Haire says: “The first step onto the property ladder remains by far the hardest with almost 90% of potential first-time buyers across Great Britain being unable to afford to get on the property ladder without additional help.”
“Today’s analysis shows that this chronic lack of affordability is about to get even worse. The upcoming stamp duty reforms, due on 1st April 2025, will further hurt first-time buyers and government schemes designed to help more people onto the housing ladder – such as the Lifetime ISA – risk becoming as obsolete as a fax machine if house prices continue to grow.
“We know the public finances are tight, but we urge the government not to move the goalposts and exacerbate the pain already being felt by first-time buyers. We are calling on the government to maintain the current nil rate stamp duty threshold of £425,000 for people buying their first home, and to uprate this threshold in line with inflation each year.”
“We also want the Government to raise the LISA threshold to a minimum of £500,000 and to reduce the 25% withdrawal penalty to 20% to ensure savers can get back what they paid in.
“Across the country we see first-time buyers doing all they can to be in the best position to afford a home of their own: working hard, saving what they can, and making use of government initiatives designed to help them into their own homes.”
“Despite these endeavours, monumental barriers stand in their way – barriers that can and should be removed.”
