- Skipton Group’s Home Affordability Index Report reveals impact of forthcoming stamp duty changes on first-time buyers in Great Britain
- Proportion of local areas in England where the average first-time buyer home falls in scope of stamp duty will almost quadruple overnight from 8.4% to 32.0% on 1st April
- The reforms will add £6,250 to the cost of buying first home worth £425,000
- Almost 90% of potential first-time buyers cannot afford to get onto the property ladder based on their own financial situation
- 6 of the 10 least affordable areas for first-time buyers are in Wales, with Scotland dominating the most affordable
Skipton Group’s unique Home Affordability Index Report today reveals how April’s planned stamp duty changes will exacerbate the acute affordability challenge facing first-time buyers.
From 1st April, the stamp duty threshold for first-time buyers in England will fall from £425,000 back to £300,000, adding £6,250 to the cost of buying a first home worth £425,000. More strikingly, the proportion of local authority areas (LAs) where the average first-time buyer property is subject to stamp duty is set to nearly quadruple overnight, rising from 8.4% to 32.0%.
The Index also highlights further affordability challenges for aspiring first-time buyers when it comes to Lifetime ISAs (LISA). Our forecasts show that by the end of 2027 the fixed Lifetime ISA (LISA) house purchase limit of £450,000 will fall below the average first-time buyer property price in more than 1 in 10 British LAs. This will render thousands of LISA savers unable to use the product to buy their first home and unable to access their savings without incurring the Government’s 25% withdrawal penalty.
Further insights from the Home Affordability Index, which now includes new local authority-level data covering 363 areas across Great Britain, include:
- Almost 90% of potential first-time buyers across Great Britain cannot afford to buy a first-time home in their local area based on their personal financial situation.
- 6 of the 10 least affordable areas for first-time buyers can be found in Wales whereas Scotland dominates the most affordable areas, with only Manchester City bucking this trend.
- In Aberdeen City―the most affordable local authority area across Great Britain―3 in 10 potential first-time buyers can take the first step on the property ladder. This drops to just 3 in 100 in Ceredigion, the least affordable.
- 4 in 10 potential first-time buyers are spending over 45% of their income on essential housing costs.
- 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 LAs, potential first-time buyers are around eight times more likely to be able to take the first step on the property ladder than those in the least affordable.
Stuart Haire, Skipton Group CEO, said:
“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.”
About the Skipton Group Home Affordability Index
The Skipton Group Home Affordability Index, created in partnership with Oxford Economics, provides unique insight into the affordability challenges faced by renters, first-time buyers and homeowners by age, income, geography and family-type. It utilises data from across Skipton Group businesses, the Office for National Statistics, the Bank of England and third-party external sources. Its comprehensive analysis and forecasting covers all 363 local authority areas across Great Britain as well at the regional and national levels.
- For more information on the Index findings click here for the Index Report.
- To explore living affordability and buying affordability across Great Britain, click here for the dedicated interactive tool
- For more information on the methodology behind the Index click here.
About Skipton Group
Skipton Group is built on two core foundations: Homes and Money. With over a million members and 1,200 branches, we offer accessible financial advice, mortgages and savings. We are home to the UK’s largest estate agency and property services provider, Connells Group, which with over 80 estate agency brands, helps over one in ten individuals buy and sell their homes. This gives us unique real time insight into the UK residential market which we use to help people into homes, help policymakers make better decisions, and help society address the needs of the hardest hit. Skipton Group also includes Skipton Building Society, offshore finance capability via Skipton International, Skipton Business Finance and Jade Software Corporation.
About Oxford Economics
Oxford Economics is one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on more than 200 countries, 100 industrial sectors, and 8,000 cities and regions. Its best-in-class global economic and industry models and analytical tools give it an unparalleled ability to forecast external market trends and assess their economic, social and business impact.
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