First-time buyer relief is designed to help those entering the market, but it is strictly capped. If you are buying a first home for £500,000 or less, you pay 0% on the first £300,000 and 5% on the portion between £300,001 and £500,000.
However, if the purchase price is even £1 over £500,000, you cannot claim any relief. In high-value areas like Reading, this “cliff edge” is particularly sharp. For example, a first-time buyer spending £500,000 pays £10,000 in tax, but someone spending £511,514 (a recent London/South East average) would pay £15,576 because they revert to standard mover rates.
The 2026 Investment Landscape
The 2025 Autumn Budget reinforced the government’s stance on secondary properties and rental investments. Below are the FAQs.
- Is Buy-to-Let investment still viable ?
Investors must account for the 5% surcharge on additional properties, which was increased from 3% in October 2024. Buy-to-Let investors do not qualify for first-time buyer relief, regardless of whether it is their first purchase.
- How do residency rules impact Gurkha veterans?
For the vibrant Nepalese community like in Aldershot, particularly Gurkha veterans, tax residency is a vital consideration. If you are not classed as a UK resident, meaning you have not been in the UK for at least 183 days in the 12 months prior to purchase, you face an additional 2% surcharge on top of all other SDLT rates. Ensuring settlement status and residency are correctly documented is essential to avoid overpaying by thousands of pounds.
- What fees are to be considered when buying a house?
Beyond SDLT, several administrative costs and new levies must be factored into your 2026 budget.
- Legal fees and VAT on Legal Fees: Conveyancing fees typically cost up to £1,800, and VAT is applicable to these professional services.
- Land Registry Fees: These are paid to register your ownership of the property and vary based on the purchase price.
- Mortgage broker fees: These are paid to the broker for their service in helping you to get the best mortgage deal that suits you.
- Mansion Tax (High Value Council Tax Surcharge): Announced in late 2025, this tax applies to homes worth over £2 million. While valuations are set in 2026, the surcharge (ranging from £2,500 to £7,500 per year) will be collected from April 2028.
- Do I pay tax on a gifted deposit?
If a parent or grandparent helps you with a deposit, you won’t pay immediate tax. However, if the donor passes away within seven years of the gift, the sum may be subject to Inheritance Tax.
- Will mortgage rates go down further after the December 3.75% base rate cut?
The current base rate is 3.75%, but the market is volatile. While some rates have decreased, others have seen increases, with the cheapest mortgages currently starting around 4.2%. The next review is scheduled for 5 February 2026.
- Should I choose a 2-year or 5-year fixed-rate mortgage in 2026?
There is no universal “best” option. A 2-year fix offers flexibility if you expect rates to drop, while a 5-year fix provides long-term budgetary certainty. Your choice should depend on your personal financial goals and how long you intend to stay in the property. Get advice from mortgage advisors like Kings Gate Finance
- Is it better to overpay my mortgage or save in a high-interest ISA right now?
Overpaying can save significant interest over time. However, a Lifetime ISA (LISA) offers a 25% government bonus on savings up to £4,000 a year, which is specifically designed to help with a first home deposit.
- Can I get a mortgage with a 5.5x or 6x income multiple in the current market?
To understand your mortgage affordability, it is wise to get advice from mortgage advisors like Kings Gate Finance. Kings Gate Finance offers an initial free consultation to understand your likely affordability.
