Saving for a first home could become easier following the Autumn Budget, with plans for smaller deposits, a new savings account and changes to Lifetime ISA penalties. Landlords, meanwhile, face another increase in tax on rental income.
Here’s what the four announcements could mean in practice.
Your First Home scheme: a 2.5% deposit
The government has announced £4.7bn of lending for Your First Home, a scheme aimed at helping first-time buyers purchase a new-build home in England.
Under the published outline, eligible buyers would put down a deposit of at least 2.5%, with the government providing an equity loan covering 20% of the price. Buyers would need a mortgage for the rest.
For an eligible £300,000 home, using the minimum deposit, that would work out as:
- Your deposit: £7,500
- Government equity loan: £60,000
- Your mortgage: £232,500
The scheme will only cover homes from participating developers. There will also be limits on household income and property prices, and the equity loan will be interest-free for an initial period.
A smaller deposit could help people who can afford mortgage repayments but struggle to save while paying rent. However, the government loan must still be repaid. Buyers will need to understand how repayments work and what interest becomes payable later.
Further guidance is needed on the launch arrangements, eligibility limits and full loan terms. Buyers will also need to meet their mortgage lender’s affordability checks.
First Time Buyer ISA: a new way to save
The Treasury has confirmed that the First Time Buyer ISA will launch in April 2029, replacing the Lifetime ISA for new accounts.
Savers will be able to pay in up to £4,000 a year, with a 25% government bonus, capped at savings of £20,000 overall. The property-price limit will remain £450,000.
The bonus will be paid when buying a qualifying first home. Withdrawals for other reasons will have no withdrawal charge, but will not receive the purchase bonus.
Existing Lifetime ISA holders will be able to keep their accounts and continue saving under the existing terms.
Lifetime ISA penalties: relief for buyers purchasing above the limit
From 29 October 2026, the Lifetime ISA withdrawal charge will fall from 25% to 20% for purchases above £450,000 that otherwise meet the qualifying rules.
The reduced charge takes back the government bonus without the additional penalty on savers’ own contributions. It does not let buyers keep the bonus above the price limit or make other withdrawals penalty-free.
Landlords face higher tax bills from April 2027
Landlords who own rental properties in their own name are set to pay more tax on their rental profits from April 2027, following a further increase announced in the Budget.
For those affected, this could mean keeping less of the money they earn from letting their property. The extra tax will depend on their total income and individual circumstances.
The precise treatment will depend on the final legislation and where in the UK they pay tax. Properties owned through a limited company are taxed differently.
The Autumn Budget offers some welcome support for people hoping to buy their first home, while bringing added costs for landlords. Smaller deposits and more flexible savings options could help more buyers get onto the property ladder, although mortgage affordability and finding the right home will remain important.
The effect on the wider property market will become clearer as the remaining details are published and the changes take effect.
