Property has long been considered an attractive home for capital in the UK because it has consistently out-performed inflation over a very long time – and there is no tax charged on any capital gain from a primary home.
First-time Buyers have also been incentivised to get on the housing ladder by stamp duty concessions, prior government policy (like Help to Buy) and often supported by the bank of 'Mum and Dad' to save for deposits.
Despite higher interest rates, First-time Buyers have remained active borrowers through 2023 and 2024, albeit at lower levels than the couple of years prior.
For residential property bought as an investment, there are no such incentives and the scope for off-setting costs against income tax has been gradually eroded. Also, successive chancellors have increased the stamp duty on buying ‘additional’ properties – most recently in the Autumn Budget when the surcharge was raised from 3% to 5%.
These facts explain why a gap has opened up between the volumes borrowed by First-time Buyers compared to Buy-to-Let investors. Source: Dataloft by PriceHubble, ONS. December 2024
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