First Time Buyer in the UK - how does it work?

In today’s article, I will provide information on the purchase of property by first-time buyers, i.e. people buying a house or apartment for the first time.

Our readers often ask about first-time buyers in the UK and how buying a property in this situation works. When buying a house or apartment in the UK for the first time, you may be able to take advantage of certain tax reliefs and government schemes. This knowledge can help them purchase their first property.

Who is a first-time buyer?

The rules on who qualifies as a first-time buyer for Stamp Duty Land Tax relief are set out in law:

To be considered a first-time buyer, you must not, either alone or with others, have previously acquired a major interest in a dwelling (a freehold, or a lease with 21 years or more left to run) or an equivalent interest in land anywhere in the world.

Source: Finance Act 2003, Schedule 6ZA (legislation.gov.uk)

Let’s clarify right away that ‘major interest’ here does not mean majority interest. It refers to the type of interest (a freehold or such a lease), not to the size of your share. So if you have previously owned any share in a home, alone or jointly with other people, you can no longer be a first-time buyer, regardless of the percentage you held.

The last thing to clarify is what the situation is when buying freehold and leasehold properties. If you have previously bought a freehold, or a leasehold with 21 years or more left to run, you are no longer a first-time buyer.

Benefits of being a First Time Buyer in the UK

There are a number of government programmes available to first-time buyers that can help them buy property. Especially for people who have a small deposit.

Here are some of the available solutions that first-time buyers can take advantage of:

First Homes Scheme

One government support scheme for first-time buyers is the First Homes Scheme. It involves giving discounts on newly built properties. The minimum discount is 30%, and local councils can require a higher discount of 40% or 50% - given that we are talking about property prices here, these amounts are very large indeed and can significantly help people buying their first home.

First Homes are expected to be secured through a section 106 planning obligation agreed between the developer and the local council as part of the planning permission. Councils set the mix of affordable housing they seek in their local plans, so whether First Homes are offered, and how many, varies by area. Once such a flat is enrolled in the scheme, it is covered by the forever discount, meaning that if the owner wants to sell it, another first-time buyer will also receive a discount - making the forever flat more readily available to new generations of first-time buyers.

In order to focus the scheme on helping those most in need, there are some additional eligibility conditions. Not only do you need to have first-time buyer status to benefit from the First Homes Scheme, but your household income must not exceed £80,000 (or £90,000 in London). In addition to this, properties are also subject to a price cap - the discounted price of a First Home cannot exceed £250,000 (or £420,000 in London).

Remember that the First Homes Scheme is only available in England and the rules may vary from region to region - local authorities may adjust some conditions, such as giving priority to key workers (such as teachers or those working in the NHS) or introducing local connection criteria that only allow people who already live in the area to participate.

Are there any alternatives to the First Homes Scheme in other countries in the UK?

Scotland, Wales and Northern Ireland do not run the First Homes scheme, but each has its own home-buying support.

• If you are thinking of buying a home in Scotland, there is the Low-cost Initiative for First Time Buyers (LIFT), which lets eligible buyers purchase a home through shared equity, with the Scottish Government holding part of the equity.

• If you are buying a home in Wales, the government offers equity loans (such as Help to Buy – Wales) and Shared Ownership – Wales.

• In Northern Ireland, the issue is handled slightly differently. First-time buyers can consider shared ownership - this works in a similar way to other countries. There is also a separate route to ownership for eligible tenants. If they have been tenants of the Northern Ireland Housing Executive (NIHE) or another eligible landlord for at least five years, they may be able to buy their home through the NIHE House Sales Scheme at a discount that depends on the length of their tenancy, up to a maximum of £24,000.

Lifetime Individual Savings Account (LISA)

The LISA can be used to buy your first home (for a property costing £450,000 or less) or to subsidise your later retirement - see our Lifetime ISA guide. To open a LISA, you must be aged 18 to 39.

You can contribute up to £4,000 each year until age 50. Your first Lifetime ISA payment must be made before age 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 a year.

If you are buying with another first-time buyer who also has a LISA, you can both use your LISAs for the same property. You must buy your home at least 12 months after your first Lifetime ISA payment.

Note that you’ll pay a 25% withdrawal charge if you take money out of your Lifetime ISA for any reason other than buying your first home, being aged 60 or over, or being terminally ill with less than 12 months to live.

Lower Stamp Duty Land Tax

First-time buyers in England and Northern Ireland can claim relief from Stamp Duty Land Tax. What exactly is Stamp Duty and what do you need to know as a first-time buyer?

In England and Northern Ireland, Stamp Duty Land Tax (SDLT) is paid to HMRC by the buyer, usually when they:

• acquire a freehold property;

• acquire a new or established leasehold;

• purchase a house or apartment through a shared ownership programme.

Scotland and Wales have their own property taxes - Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) - with different rates and reliefs, so the SDLT figures here do not apply there.

Standard SDLT rates for properties purchased from 1 April 2025 are:

• 0% on property value up to £125,000;

• 2% on the next £125,000 - the portion between £125,001 and £250,000;

• 5% on the next £675,000 - the portion between £250,001 and £925,000;

• 10% on the next £575,000 - the portion between £925,001 and £1.5 million;

• 12% on any remaining amount - for the part above £1.5 million.

Below is information about this tax if you are a first-time buyer. As you will see, first-time buyers can qualify for relief.

• If you are a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties valued up to £300,000;

• If the property you are buying is between £300,000 and £500,000, you will pay no Stamp Duty on the first £300,000, followed by a reduced rate of 5% SDLT on any value between £300,001 and £500,000;

• If you purchase a property with a value above £500,000, you will have to pay standard Stamp Duty rates and will not qualify for first-time buyer relief.

More information about this tax and a helpful tax calculator can be found on our website: What is Stamp Duty land tax?

I hope you now know the benefits of being a first-time buyer in the UK and how it works. There are several valuable blog posts on buying a house or apartment in the UK. I encourage you to read a few of them: How to buy a house in the UK, Buying a house in the UK step by step.

As always, I also encourage you to contact me if you need help choosing the right government programme or need a competent mortgage broker to advise and help you buy your first home.