Fact 24. What do First Time Buyers need to know?
First-time buyers need to understand budgeting, mortgage options, legal steps, and government schemes to successfully navigate their home purchase.
Buying a home for the first time is a landmark achievement, often involving more challenges than subsequent property purchases. For first time buyers, their status plays a pivotal role in the conveyancing process—the legal procedure required to transfer ownership of a property. This status unlocks access to financial benefits, government assistance schemes, and protections that can make buying a home more affordable and manageable. Understanding these factors helps first time buyers navigate the often complex conveyancing journey with greater confidence and clarity.
First time buyer status means you have never owned a residential property before in the UK or abroad. Your conveyancer or legal advisor will establish this early on because it affects key parts of the transaction, from tax relief to eligibility for specific government programs and mortgage products.
Stamp Duty Land Tax (SDLT) Relief for First Time Buyers
An important financial advantage for first time buyers in England and Northern Ireland is the SDLT relief, especially with the updated thresholds in 2025. Since April 1, 2025:
- No SDLT is payable on the first £300,000 of the property price.
- A 5% SDLT rate applies to the portion between £300,001 and £500,000.
- Properties priced above £500,000 do not qualify for first time buyer relief and standard SDLT rates apply.
For example, purchasing a property worth £350,000 will incur SDLT of 5% on £50,000, which equals £2,500.
This relief significantly lowers the upfront tax burden for first time buyers on many properties but is importantly capped at £500,000. If you buy a property valued higher than this, no SDLT relief applies and the purchase will be taxed at the standard rates.
Government Assistance Schemes to Support First Time Buyers
Since the closure of the Help to Buy equity loan scheme, several other government initiatives have become vital tools for first time buyers:
Shared Ownership
- This scheme enables buyers to purchase a share, typically between 25% and 75%, of a property and pay rent on the remainder owned by a housing association.
- It provides a more affordable way into the property market where full ownership might be financially out of reach initially.
- Buyers have the option to ‘staircase’ by gradually purchasing more shares in the property as their finances allow, eventually achieving full ownership.
- The conveyancing process for shared ownership involves additional steps including reviewing leasehold terms, rent obligations, and staircasing clauses to protect buyer rights.
- Eligibility criteria usually include a household income cap (commonly £80,000 or less per year outside London, £90,000 or less inside London) and a need to demonstrate inability to afford full market purchase.
Lifetime ISA (LISA)
- Available to first time buyers aged 18-39, the LISA allows individuals to save up to £4,000 per year and the government adds a 25% bonus to savings (maximum £1,000 bonus per year).
- Funds from a LISA can be used towards a first home purchase priced up to £450,000.
- Conveyancers help ensure the funds are applied within the legal timeframes and conditions to avoid penalties.
Local Authority and Regional Home Ownership Schemes
- Various councils and regions offer their own initiatives, some similar to the Help to Buy scheme, such as shared equity loans or discounted homes aimed specifically at first time buyers or local residents.
- These schemes have specific eligibility, often including income caps or residency requirements, and conveyancers ensure compliance with these before completion.
Mortgage Products with Low Deposits
- Many lenders now feature mortgage products specifically designed for first time buyers, offering loan-to-value ratios (LTV) as high as 95%, requiring only a 5% deposit.
- Some lenders provide tailored first time buyer mortgages with competitive rates and additional support such as free legal advice or valuation offers.
- Conveyancers commonly work closely with mortgage brokers and lenders to manage documentation and deadlines that pertain to these products.
Why First Time Buyer Status Matters in Conveyancing
Identifying first time buyer status early in the process is critical because:
- It determines eligibility for SDLT relief and ensures accurate tax filings, securing substantial savings.
- It unlocks government schemes which require precise legal checks and documentation to ensure compliance and maximise benefits.
- It guides conveyancers to tailor communications and legal advice, recognising that first time buyers may need greater support understanding the process.
- It influences mortgage arrangements and the management of deposit funds, particularly when government bonuses or shared ownership payments are involved.
- It highlights the need for thorough risk assessment, with additional emphasis on uncovering any title issues or restrictive terms that may affect unfamiliar buyers.
First time buyers often face a steeper learning curve in property purchasing. The conveyancing process therefore provides essential education and support by explaining terminology, guiding buyers through contract terms, searches, and completion procedures, and liaising between sellers, lenders, and landlords to smooth the path to ownership.
Key stages in conveyancing where first time buyer status has impact include:
- Accurate preparation and submission of SDLT returns claiming relief.
- Managing legal contracts and leases for shared ownership or regional assistance schemes.
- Handling arrangements for deposit payments involving LISA funds or government loans.
- Coordinating mortgage documentation linked to first time buyer support.
- Advising on responsibilities such as ongoing rent in shared ownership or leasehold terms.
- Supporting first time buyers to understand legal risks and safeguards throughout purchase.