As the countdown to April 1, 2025, begins, homebuyers in England and Northern Ireland face significant changes to stamp duty thresholds that could impact their property purchases.
Following the government’s decision to reverse the temporary increases made in 2022, which were first highlighted on homebuilding.co.uk, many buyers will find themselves paying higher taxes.
With experts predicting a surge in transactions as people rush to close deals before the deadline, it’s crucial for buyers to understand what these changes mean for them, how house prices could be affected and how the changes could reshape the property market.
What is stamp duty?
Stamp duty is a tax paid when purchasing property or land in England and Northern Ireland.
The amount of stamp duty you pay depends on several factors, including:
Purchase price
Whether the property will be your main residence
When the purchase is made
Whether you're a first-time buyer
The amount depends on the property’s value and the buyer’s status (e.g., first-time buyer or additional property owner). Separate systems apply in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax).
Upcoming changes
In September 2022, the threshold for SDLT was temporarily increased to support homebuyers.
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The zero-tax threshold rose from £125,000 to £250,000, while first-time buyers benefited from an even higher threshold, paying no SDLT on properties up to £425,000. These changes provided savings of up to £11,250 for eligible buyers.
However, these measures were always meant to be temporary. From April 1, 2025, the threshold will revert to its previous level of £125,000, with the first-time buyer relief threshold reducing to £300,000. This change could increase tax bills by thousands for buyers purchasing properties above these thresholds.
However, with property sales currently taking an average of 152 days to complete, time is tight. Tim Bannister, Director of Property Science at Rightmove, warns that buyers must act quickly to ensure they finalise before the deadline.
After April 1st buyers of properties priced at £250,000 will face an increase of £2,500 in stamp duty whilst first-time buyers purchasing properties worth £425,000 will face up to £3,500 more in tax.
Robert Gardner, Nationwide's Chief Economist, adds further context: “Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax. This will lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Tim Bannister
Tim Bannister joined Rightmove in 2010, initially working in our lettings division before transitioning his focus to insights. As the current Director of Property Science, Tim leverages data, technology, and analytics to create distinctive insights that inform and guide property-related decision-making processes.
Areas most affected by stamp duty changes
A study by My Home Move Conveyancing has highlighted how first-time buyers in England will be impacted by upcoming stamp duty changes starting in April 2025.
Key findings across 69 local authorities estimated changes in areas included:
London and the South East: Areas like Richmond, Wandsworth, and Hackney will see stamp duty increases of over £11,000 for first-time buyers.
University cities: In cities such as Oxford and Cambridge, buyers will face costs ranging from £5,000 to £6,000.
Northern exception: Trafford in Greater Manchester is the only area in the North where buyers will be affected, with costs above the new threshold.
Alistair Singer, Director at My Home Move Conveyancing, advises buyers to prepare early to avoid the rush, saying: “The financial impact will still come as a shock to first-time buyers.”
Areas with the biggest impact:
Richmond upon Thames: Average property price £584,000 | Stamp duty increase: £11,250
Wandsworth: Average property price £545,000 | Stamp duty increase: £11,250
Oxford: Average property price £419,000 | Stamp duty increase: £5,950
Brighton and Hove: Average property price £350,000 | Stamp duty increase: £3,900
As the April 2025 deadline approaches, many first-time buyers are expected to rush to complete their purchases to avoid the higher costs. Alistair Singer stresses the importance of early planning, adding: “Instructing a conveyancer early in the process should help avoid any disappointment.”
For those in affected areas, acting quickly could make a big difference in securing a property before the changes take effect.
Will the stamp duty deadline be extended?
Prime Minister, Keir Starmer, confirmed the Labour Government were not going to renew the stamp duty cut made by the Conservatives in 2022 so the deadline of March 31st will be the last time homebuyers will benefit from the cut for the foreseeable future.
On BBC Radio 5 Live in June 2024, Starmer confirmed to a caller that Labour was "not going to renew it” when asked about the stamp duty cut.
Will stamp duty changes affect house prices?
An increase in stamp duty is set to place significant strain on the British property market, according to property expert David Hannah, Chairman of tax advisers Cornerstone Tax.
The new stamp duty thresholds are expected to substantially raise the tax burden, with the average homebuyer facing an increase from £2,768 to £5,268.
Hannah argues that the government's actions will worsen the market's challenges, saying: “If the Chancellor and Prime Minister are serious about delivering 1.5 million new homes, they cannot afford to drive landlords out, burden first-time buyers with extra costs, and freeze up capital for developers — all of which impede the sale of homes.”
He suggests that these changes will further deter market participants, and builders may halt development until there is a ready market for new properties.
Hannah predicts that stamp duty receipts will initially fall sharply, followed by stagnation in the first quarter of 2025, leading to a potentially dire situation for the property market. He concludes that by lowering the stamp duty thresholds, it will ultimately be consumers who bear the brunt of the costs.
With the deadline fast approaching, prospective homebuyers need to act swiftly to avoid facing higher stamp duty bills.
The upcoming changes could alter the affordability of homeownership for many, especially first-time buyers and those purchasing second homes.
As the property market braces for impact, staying informed and preparing for these new tax rates will be essential to navigating the evolving housing landscape.
News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals. Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.
