Stamp duty set to rise 3% as Osborne announces new measures to help first-time buyers

Chancellor George Osborne has announced a raft of new measures in the Autumn Statement to help struggling first-time buyers as part of the government’s plans to build 400,000 affordable homes.

As well as a new rate of stamp duty for buy-to let properties, a “London Help to Buy” equity loan scheme will be introduced and rules will also be relaxed on shared ownership to help give aspiring homeowners a step up on the property ladder.

In his Autumn Statement, Osborne said that as of 1 April next year, people purchasing buy-to-let properties and second homes will pay an extra 3% in stamp duty.

“Frankly, people buying a home to let should not be squeezing out families who can’t afford to buy a home. So I am introducing new rates of stamp duty that will be 3% higher on the purchase of additional properties like buy-to-lets and second homes. It will be introduced from April next year and we’ll consult on the details so that corporate property development isn’t affected,” Osborne said.

It is expected that the additional stamp duty hike will bring in almost £1 billion by 2021.

Money raised from tax on people buying their second home will also be used to help those struggling to buy their first property.

The London Help to Buy Scheme will give Londoners with a 5% deposit the opportunity to get an interest-free loan of up to 40% on the value of their home from April 2016. Homebuyers will then need a mortgage of up to 55% to cover the rest.

Current restrictions on who can buy a home through shared ownership will be removed from April 2016.

Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, will be able to buy a home through shared ownership.

Shared ownership allows people to buy a share of a home, rather than the whole house, and then buy a greater share over time when they can afford to. They pay rent on the rest of the property they do not own. Currently, homes can be purchased through local councils and housing associations.

Right to Buy will now be extended to housing association tenants during 2016, giving 1.3 million households the chance to become home owners. A small number of housing associations will pilot the scheme in the next few months.

First-time buyers will also be able to get a 20% discount on 200,000 new starter homes, with £2.3 billion being spent on them in the next five years.