Two months left for first-time patrons to keep away from stamp hike

First-time buyers in England are being warned they only have roughly two months to find a property or their stamp duty bill could skyrocket. 

Thousands of first-time buyers benefited when stamp duty rates were temporarily reduced during the 2022 mini budget. 

But SDLT rates will return to their previous thresholds from 1 April 2025, assuming no further changes are announced in the autumn budget. 

A first-time buyer purchasing a property up to the value of £425,000 currently pays no stamp duty.

Tax hit: Currently, a first-time buyer pays no stamp duty on properties up to £425,000, but this is due to drop back to £300,000 from April 2025

However, from 1 April, the same purchase will be subject to a £6,205 tax bill when stamp duty rates return to previous levels. 

Zoopla argues first-time buyers have about two months to find a home and have their offer accepted before it will likely be too late to avoid the SDLT changes. 

This is because the average property sale is taking 25 weeks from listing through to completion, according to the property portal.

How is stamp duty set to change?

At present, a first-time buyer pays no stamp duty when they buy a home worth up to £425,000. 

If their home is more expensive, they pay tax on the portion above £425,000. 

However, this limit is due to drop back to the old threshold of £300,000 from April 2025.

First-time buyers purchasing homes priced between £500,000 and £625,000 will also lose their eligibility for first-time buyer relief.

These changes mean a third of first-time buyers in England will pay more stamp duty from April next year than they do now, according to Zoopla.

Who will be worst affected?

Zoopla suggests some first-time buyers could save up to £15,000 in stamp duty by purchasing a home before 1 April. 

In reality only a minority of first-time buyers will get close to that sort of saving.

Stamp duty is often felt by those moving home in Southern England, which makes up 81 per cent of total SDLT receipts, according to Zoopla’s analysis.

From 1 April, the average first-time buyer in London will face a stamp duty bill of £5,600.

Those in the South East will face an average bill of £1,390 and those in the East of England will pay £1,040 on average compared to nothing today. 

However, in some areas of London, first-time buyers will pay an additional £15,000 in stamp duty as things stand and there is no change announced in the Budget. 

For example, the London Boroughs of Camden, Hammersmith and Fulham, and Islington – where property prices are above £500,000 on average – will see SDLT increase by an average of £15,000.

The most affected local authorities in Southern England: More than four in five of all total SDLT receipts come from Southern England, according to Zoopla

Due to lower property prices, the vast majority of buyers in the North of England and the East and West Midlands will be unaffected by the changes next April. 

Zoopla says around 95 per cent of first-time buyers within these regions are currently looking for homes priced below £300,000 and therefore will not be impacted.

Izabella Lubowiecka, senior property researcher at Zoopla said: ‘Thousands of first-time buyers have benefitted from the relief in stamp duty introduced in 2022. 

‘With just two months to go, those looking to purchase their first home should act this Autumn if they are to avoid paying more in stamp duty, particularly if they are looking to purchase a home in Southern England, an area where first-time buyers are likely to see a sizable increase in SDLT once the changes come into effect next April.

‘Those not looking to purchase until after 1 April, should make sure they build the additional stamp duty fees into their plans and account for it in their overall budgets.’