5 ‘must know’ facts for first-timer buyers in 2023

Getting a foot on the property ladder remains a goal for many, especially as every UK region has seen annual rental value growth, according to the latest HomeLet Rental Index.

Many may wonder whether 2023 will be a good year to make a property purchase so to steer buying novices in the right direction, here are 5 facts for 2023’s first-time buyers.

1. Mortgage interest rates have fallen…and may continue to do so
A cooling housing market and falling inflation is widely forecast to result in lower mortgage rates this year, with tracker mortgages potentially offering attractive repayments. The financial experts’ advice is to start a conversation with a lender or mortgage adviser to establish what is possible, based on personal circumstances, rather than be influenced by newspaper headlines and rumours.

2. The Government has extended its Mortgage Guarantee Scheme
In late 2022, the Government extended its Mortgage Guarantee Scheme on a UK-wide basis. Rather than end in December 2022, it now runs until December 2023. The initiative allows first-time buyers with a 5% deposit to access a greater range of mortgages. The scheme can be used to purchase homes worth up to £600,000, subject to affordability and eligibility checks.

3. House prices have stabilised
When a panel of mortgage experts were asked to deliver their verdict on prospects in 2023, they reported it could be a good year ahead for first-time buyers. One of the factors behind the positivity is the stabilisation of house prices. Runaway values that soar month-on-month will be far less frequent and, in some places, prices may even drop back slightly – increasing affordability for first-time buyers.

4. Stamp duty favours the first-time buyer
Many first-time buyers in England, Scotland and Wales will continue to pay nil or reduced stamp duty when buying their first home. Cuts made to stamp duty thresholds in England in 2022 will stay in place until 31st March 2025. First-Time Buyers’ Relief has increased to £425,000, meaning purchases below this value will not incur a penny of stamp duty. The maximum property value that is eligible for First-Time Buyers’ Relief has also increased, from £500,000 to £625,000. This means the remainder of a first-time buyers’ purchase between £425,000 and £625,000 will be taxed at 5%.

In Scotland, Land and Buildings Transaction Tax (LBTT) also favours property novices. A special relief for first-time buyers is available, with properties bought for £175,000 or less attracting nil tax. There is no first-time buyer tax relief in Wales but Land Transaction Tax (LTT) only applies to properties bought for more than £225,000 .

5. The LISA scheme makes saving for a deposit easier
First-time buyers aged between 18 and 40 can open a long-term savings product called a Lifetime ISA (LISA), exclusively designed to help save for a deposit. The scheme sees the Government ‘top up’ money saved – with a 25% bonus up to a value of £1,000 per year. For example, £800 put in a LISA over 12 months will be topped up by £200, resulting in a savings pot of £1,000.

Savers can add £4,000 every year to the account and when two first-time buyers are purchasing a property together, they can combine their LISA-saved deposit. There are some restrictions attached to a LISA, however. These include the buyer purchasing a property costing £450,000 or less and using a mortgage to fund the purchase.

If you are a first-time buyer and would like more moving advice, along with a selection of properties for sale, contact our estate agents today.