Stamp duty thresholds will return to normal on 31 March 2025, and buyers are running out of time to take advantage.
Property portal Zoopla says buyers have just two months left to buy with a reduced tax bill, as the average sale takes 25 weeks to complete.
For any purchases completed after 31 March, first time buyers will only be spared stamp duty on the first £300,000 of their new home – down from £425,000 at the moment.
The nil-rate threshold for all other buyers will fall back from the current £250,000 to £125,000. A property value between £125,000 and £250,000 will attract 2% stamp duty. For a property priced at £250,000 or above, this would result in an extra £2,500 to pay.
Should agents expect a surge of FTBs?
The prospect of a tax rise can motivate buyers and sellers. The stamp duty holiday in 2020 boosted demand in most price brackets, while rumoured increases to Capital Gains Tax are encouraging landlords to sell.
But any effect is likely to be highly regional, according to Zoopla. The platform says that 81% of stamp duty receipts come from housing transactions in Southern England, as this is where prices are highest. From 1 April, the average first-time buyer in London will pay £5,600 in stamp duty compared to £0 currently.
Meanwhile, only around 5% of first-time buyers in Northern England and the Midlands will be affected, as almost all FTB purchases are under £300,000.
What next for stamp duty?
Before the election, Labour said that it would not extend the higher stamp duty threshold. But the government is now prioritising closing what it says is a “£22bn black hole in the public finances”, making tax cuts unlikely.
But economists have criticised the tax, saying that it puts people off moving to find better job opportunities and discourages retirees from downsizing. This month, the Organisation for Economic Co-operation and Development (OECD) called on the government to scrap stamp duty completely.
Other first-time buyer headlines:
Manchester named top hotspot for first-time buyers in Halifax study – The Guardian
Lloyds Banking Group introduces new 5.5x LTI for first-time buyers – Financial Reporter
Yorkshire BS calls for first-time buyer and saver support in Budget – Mortgage Solutions
