LONDON (Reuters) – Britain will raise the stamp duty tax paid on second house purchases from Thursday, in a bid to raise revenue to support first-time homebuyers, finance minister Rachel Reeves announced in her first budget on Wednesday.

The surcharge on second homes will increase by 2 percentage points to 5%, Reeves said.

“This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years,” Reeves said.

Reeves did not extend a discount for home-buyers that is set to expire next year.

At present, stamp duty is paid on homes worth more than 250,000 pounds ($325,000), or 425,000 pounds for first-time buyers.

Those thresholds, introduced in September 2022 in former Prime Minister Liz Truss’ mini-budget, are due to expire at the end of March 2025.

Housing is a key pillar of the new Labour government’s plans to boost economic growth.

It has an aim of delivering 370,000 new houses annually over the next five years, up from a former target of 300,000 that was abandoned by the previous Conservative government.

The Institute for Fiscal Studies, a think tank, last month called on Reeves to avoid increasing the threshold at which stamp duty is first payable which it said would act as a drag on growth.

Wednesday’s announcement might make it harder for first-time buyers to get on the property ladder and for people to move.

Stamp duty, payable in England and Northern Ireland, is a graduated tax that climbs from zero up to a maximum of 12% on the portion of the property price above 1.5 million pounds.

($1 = 0.7704 pounds)

(Reporting by David Milliken and Sachin Ravikumar, writing by Suban Abdulla; Editing by Hugh Lawson)