October 30th, 2024 saw Chancellor of the Exchequer, Rachel Reeves, announce the new Labour government’s first Budget. The announcement saw changes implemented across a range of fiscal issues, but what, if anything, does it mean for homeowners and mortgages?
While the much-anticipated announcement saw many changes across a variety of taxable areas, including non-domiciles, inheritance tax, private school fees and Capital Gains Tax, the mortgage market was largely untouched.
For those owning a single property, the Budget had little impact.
The Chancellor did, however, unveil a 2% increase in Stamp Duty Land Tax (SDLT) on second homes, raising SDLT from 3% to 5%.
Given the optimism provided by the reduction of the base-rate in August, and the subsequent hold in September, it could be considered that the Chancellor’s lack of action is beneficial to the overall stability of the market.
However, with the former Conservative government’s first-time buyer stamp duty relief coming to an end, many experts have called on the government to extend this beyond March 2025.
With the relief coming to an end, the 0% stamp duty for first-time buyers is due to reduce from £425,000 to £300,000. Additionally, stamp duty for repeat buyers will revert back to 0% up to £125,000 and 2% between £125,001 and £250,000.
The end of the former governments relief also brings with it a reduction to the property value at which first time buyer stamp duty relief ceases to apply, down from £625,000 to £500,000. From April 1st 2025, first time buyers purchasing a property of over £500,000 will receive no Stamp Duty Relief, and will be subject to standard Stamp Duty Land Tax rates.
Thomas Jackson, Managing Director of Cooper Associates Mortgages, commented on the Budget:
“As expected, this Budget placed very little focus on the mortgage market. It is disappointing not to have seen an extension in stamp duty, or more permanent changes, helping our ever-struggling first time buyers. Whether or not the wider changes to fiscal policy will have an impact on what has been an improving year for homeowners will need to be seen.”
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