In the Autumn Budget, Chancellor Rachel Reeves announced changes to stamp duty rates for home-movers and landlords in England, effective from April next year.
Since September 2022, buyers of properties priced up to £250,000 have been exempt from paying stamp duty. However, this exemption will end in April, reverting to the previous threshold where stamp duty is applicable on properties priced above £125,000.
First-time buyers have also benefited from higher thresholds since 2022, with no stamp duty payable on homes costing up to £425,000. For properties priced above £425,000, they currently pay a 5% rate on amounts up to £625,000. However, if the property exceeds £625,000, the first-time buyers’ relief does not apply. From April, this threshold will revert to £300,000.
Buyers rush to beat the deadline
There are already indications that first-time buyers in more expensive areas are accelerating their plans to avoid the April 2025 stamp duty changes.
“With stamp duty thresholds in England set to decrease from April, we’re noticing early signs of first-time buyers reacting. In London and other high-priced regions, where the impact will be felt most, some buyers are bringing forward their plans to sidestep higher charges.”
“In contrast, in many other parts of England, where more properties remain stamp duty-free for first-time buyers, we’re seeing a different trend. Some buyers are taking a step back following the Autumn Budget, which offered no additional support. However, the recent and long-anticipated second Bank Rate cut is a positive development. It should help improve affordability and boost confidence among buyers throughout 2025,” he adds.
Where will the stamp duty changes impact first-time buyers most?
First-time buyers in higher-priced areas of England are set to be more affected. In London, only 8% of homes for sale will be stamp-duty free for first-time buyers from April. It’s 24% in the South East, and 32% in the East of England.
These areas have seen an uptick in first-time buyer demand since the Budget, suggesting some first-time buyers are rushing to avoid paying higher charges. Before the Autumn Budget, first-time buyer demand in London was 28% ahead of last year – now, it is +31% ahead.
In the East of England, the trend has moved from +28%, to +32% ahead of the same period last year since the Budget, and in the South East, first-time buyer demand has ticked up from 23% ahead of last year pre-Budget, to 24% ahead post-Budget.
The upward trend compares with most other areas of England that have seen a decline in demand since the Budget, except for the North East.
Rising stamp duty charges are likely to have less impact in areas where there is already a wide availability of homes below the £300,000 threshold. More widely, there was little market support announced in the Budget to help first-time buyers, which could be contributing to some pulling back.
How long is it taking to buy a home?
It currently takes an average of 5 months (151 days) to complete a property transaction across Great Britain. This means that first-time buyers hoping to find their next home and complete before the stamp duty deadline in April 2025, need to act quickly and hope to beat the average length of time to complete a home purchase.
How much is stamp duty?
The amount of stamp duty tax you will need to pay depends on a wide range of factors, including how much you pay for the property, the location of the property, whether you’re a UK resident, and whether you’re a first-time buyer. It also depends on whether you’re buying a main home, a holiday home or an investment property.