Your First Home Scheme
The Chancellor also confirmed the launch of the £4.7bn Your First Home Scheme for First Time Buyers buying a New Build home. Buyers will need a deposit of just 2.5%, and the Government will provide a 20% equity loan, which is interest free for the first 5 years.
Pre-registration will open by the end of December this year, and the scheme will open for applications in February 2027. It’s hoped the first loans will be issued from April 2027.
The scheme is expected to help around 70,000 households in England and the Government estimates it will also support the construction of 20,000 new homes.
ISAs
There was more news of the launch of the new First Time Buyer ISA from April 2029 to help those saving to get their foot on the property ladder and which will ultimately replace the Lifetime ISA. It will allow contributions of up to £4,000 a year with a 25% Government bonus, which will be paid when funds are withdrawn to buy a home up to the value of £450,000.
Lifetime ISAs will now see a reduced withdrawal charge for those buying above the £450,000 price cap.
Healey also confirmed a U-turn on plans to reduce the cash ISA limit from £20,000 to £12,000 for the under-65’s announced in last year’s Budget. The limit will now remain at £20,000 for people of all ages.
Increased tax on property income
The Government confirmed today it will increase tax on property income and savings as previously announced, but it will now rise by an additional 2% from April next year, taking basic, higher and additional tax rates to 24%, 44% and 49% respectively. Consequently landlords will be feeling the squeeze again and get to keep less of the income their investments generate.
Bank Tax Hike
This was widely expected but the surcharge will be less than originally expected and is limited to 15 months.
Although it’s always possible that an additional cost to the banks will trickle down to customers the direct impact on mortgage borrowers should hopefully be very little at all.
Cost of Living
A big theme of the budget was to give households some breathing space as they face into a winter of higher energy costs.
A series of measures were announced including £100 to be paid directly to all households with property in Council Tax Bands A-D to help with energy costs. In addition the VAT cut on energy bills is to be extended until July 2027 and gas standing charges will be removed from bills from 2027, with similar action on electricity charges to follow. The freeze on fuel duty has also been frozen until July 2027.
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