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Chancellor John Healey announced the details of two schemes aimed at helping first-time buyers onto the property ladder in today's Autumn Budget.
The Your First Homes scheme was announced in September and is a government-backed equity loan designed to help buyers with smaller deposits access lower mortgage rates, while a new First-Time Buyer Isa, mooted in last year's Budget, will help boost their deposit with a 25% government bonus.
More immediately, the Chancellor also announced a reduction to the penalty paid by first-time buyers using a lifetime Isa to purchase a home for more than £450,000, and a further increase of two percentage points to tax rates on income from property from April 2027.
Here, Which? explains who will qualify for the new first-time buyer schemes, when they're expected to launch and what other key property announcements from the Budget speech mean for you.
The Chancellor announced that the government will cut the lifetime Isa penalty if you purchase your first home above the £450,000 limit. Currently, if you buy a home worth more than the threshold, you will incur a charge of 25% on the balance of the lifetime Isa.
From midnight on 29 October, savers who use a lifetime Isa to buy their first home above the £450,000 threshold will incur a reduced penalty of 20% of their lifetime Isa balance.
The charge for unauthorised withdrawals from a lifetime Isa (ie using it for something other than buying your first home or for your retirement) will remain at 25%.
The Your First Home scheme aims to help tackle the affordability challenges facing first-time buyers trying to get onto the property ladder.
It will be open to first-time buyers purchasing a new build, with price caps set based on the local authority median prices. The inner and outer London caps will be £650,000 and £500,000 respectively.
Buyers will need to put down a minimum 2.5% deposit and a maximum of 15%. The government will provide a 20% equity loan, with a mortgage covering the rest of the purchase price. The 20% government loan will have an interest-free period of five years. After that period, the government says the interest rate on the loan will increase gradually.
Households with an income above £110,000 (£140,000 in London) will not be eligible for the Your First Home scheme.
The new scheme will open for pre-registration by the end of December 2026, and full applications will open from February 2027. The first loans are expected to be issued from April 2027.
You repay the 20% equity loan as a proportion of the amount you sell the home for. For example, if you purchased a property for £200,000 using a 20% equity loan (borrowing £40,000), and the value of the property increased to £220,000, you would owe £44,000 at repayment to reflect the value increase.
Critics of the scheme say it may put buyers at risk of negative equity, inflate house prices and leave buyers facing high interest rates on the equity loan once the interest-free period ends.
The scheme builds on the previous first-time buyer scheme, Help to Buy, which was available from 2013 to 2023. Help to Buy also included an interest-free equity loan for five years. A Which? investigation in 2020 found that more than 5,000 Help to Buy homeowners lost money on their properties in the scheme's first six years, even as average prices in their local areas rose.
A First-Time Buyer Isa will replace the lifetime Isa from April 2029.
It will allow savers to put away a maximum of £4,000 per year, which will be boosted by a 25% government bonus.
The two key differences between the lifetime Isa and the new First-Time Buyer Isa are that the new product can only be used to purchase your first home and that the bonus is paid at a different point.
For the new First-Time Buyer Isa, the 25% government bonus will be paid on the value of the account balance when funds are withdrawn for a qualifying first home purchase, up to the value of £450,000. This means that buyers purchasing a home above the £450,000 limit will not need to pay a withdrawal charge.
The maximum value of the bonus will be capped at £20,000. There will also be no upper age limit for first-time buyers using the Isa, reflecting their rising age.
This new Isa will replace the lifetime Isa in April 2029. You can still open a lifetime Isa, but providers will stop offering them from April 2029. If you open a lifetime Isa before this date, you will be able to contribute to it under the current rules indefinitely.
In last year's Budget, Rachael Reeves announced that tax rates on income from property will rise by two percentage points from April 2027.
This year's Budget also announced a further two-percentage-point increase from April 2027.
The table shows the new tax rates.
| Band | Tax rate currently | Tax rate from April 2027 |
|---|---|---|
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
A new surcharge on properties in England valued at more than £2m is still due to come in April 2028.
The High Value Council Tax Surcharge (HVCTS), or 'mansion tax', was announced in last year's Budget, but speculation suggested the £2m threshold could be reduced in this year's Budget.
In the Budget, the government pointed to the recent consultation on the new tax, which confirmed that the government will introduce a deferral scheme, a series of discounts and exemptions, and a 100% premium on properties left empty and unoccupied for 12 months or more. No further details were disclosed.
The new tax will charge properties valued at more than £2m £2,500 a year, rising to £7,500 a year for properties valued at more than £5m.
The HVCTS will be owed by the property owner rather than the occupier, and will be collected alongside council tax.
Homes will be charged based on 2026 property prices. Charges will increase by CPI inflation each year from 2029-30 onwards, and the thresholds will be reviewed every five years.
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High mortgage rates have reduced buyer numbers in some parts of the country. To help boost the property market and offset higher mortgage costs, some called for stamp duty cuts or a shift in who pays it in the Budget.
However, the Chancellor announced no such changes. Stamp duty thresholds remain the same.
For the full details of thresholds and rates in England, Wales, Scotland and Northern Ireland, head to our stamp duty calculator.
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