First-time buyers are facing (Image: Getty)
Many first-time are currently “blissfully unaware” of incoming changes to which will have significant implications for them – with time running out to beat a looming deadline early next year.
Stamp Duty Land Tax (SDLT) in the UK is calculated based on the purchase price or market value of a property, with varying rates depending on the property’s value and whether the buyer is a , purchasing a second home, or buying through a corporate body.
The rates are progressive, meaning higher prices incur higher tax rates. For residential properties, the standard rates range from 0% for properties up to £125,000, 2% for the portion between £125,001 and £250,000, 5% for £250,001 to £925,000, 10% for £925,001 to £1.5 million, and 12% for anything above £1.5 million. First-time buyers benefit from a higher threshold and reduced rates.
However, from April 1, 2025, the nil rate threshold for residential properties will decrease from £250,000 to £125,000, which means more homebuyers will pay tax on their purchases.
Additionally, the relief threshold for first-time buyers will drop, with the nil rate band for these buyers reducing from £425,000 to £300,000, and the maximum price eligible for First-Time Buyers’ Relief will lower from £625,000 to £500,000.
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The temporary threshold was announced by former Tory Chancellor Jeremy Hunt (Image: Getty)
The changes are expected to increase the amount of tax paid by many buyers, particularly those purchasing homes above these new thresholds.
Harps Garcha, director at Brooklyns Financial, said: “Many first-time buyers remain blissfully unaware of the incoming stamp duty changes.
“These could materially impact their homeownership aspirations. While there is still time to meet the deadline, it’s important to highlight that purchasing a property solely to meet a timeline is not advisable – it should be the right fit for the buyer.”
Simon Bridgland, director at Release Freedom told first-time buyers “time was not on your side” when it came to beating the end-of-March deadline.
He said: “It is possible you could beat it if all of your ducks are in a row when it comes to any application and of course jump onto anything straight away if your solicitor or broker asks for it.
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“Although always a temporary adjustment, to most first-time buyers it will feel like daylight robbery. One day they are not paying stamp duty, then the next they are presented with an extra £2,500 in their solicitors’ bill. It’s going to sting and first-time buyers especially will be reeling.”
Jack Tutton, director at SJ Mortgages, said: “The stamp duty changes that are coming in have been overlooked by many prospective buyers we have been speaking to.
“Given there was no mention of this in the Autumn Budget, people haven’t realised the changes introduced by the Conversatives were only a temporary measure.
“However, with the changes due to take effect from the April 1, there is still time to beat the deadline providing that the chain works together to achieve a completion date prior to the deadline.”
Craig Fish, director at Lodestone Mortgages & Protection said the rules changes meant new buyers “face a harsh reality this Christmas”.
He said: “Affording both a deposit and stamp duty could mean the dream of homeownership stays under the tree, untouched.
“Even for those with the funds, time is running out to beat the deadline. With property purchases taking an average of five months to complete, many may have already missed their chance.
“But for those still keen, it’s all about preparation: get your paperwork gift-wrapped and ready, and start viewing properties like they’re the hottest items on the Christmas list.”