Upcoming Stamp Duty changes in the UK – what buyers need to know

In the Autumn Budget 2024, Chancellor Rachel Reeves announced that Stamp Duty thresholds will revert to previous levels, so buyers will be liable to pay more tax on their house purchases from April 2025. These upcoming changes will have considerable implications, particularly for first-time buyers who have greatly benefitted from the temporary threshold increase.

How are FTBs affected?

Since September 2022, first-time buyers have not paid any Stamp Duty on properties worth up to £425,000. However, the nil-rate threshold will go back down to £300,000 in April. Additionally, the maximum purchase price for which First-Time Buyers’ Relief can be claimed will drop from £625,000 to £500,000. Properties above this threshold will no longer qualify for any tax relief.

The financial impact of these changes is significant. For instance, after the 31 March deadline, a buyer purchasing their first home for £425,000 will need to pay Stamp Duty of £2,500. This additional cost could make the dream of homeownership more challenging for many prospective FTBs.

Impact on other buyers

The changes will affect not only first-time buyers but also other home movers. For example, a buyer purchasing a property for £425,000 will see their Stamp Duty liability increase from £8,750 to £11,250 – an additional cost of £2,500.

A rush to complete transactions

The upcoming changes are expected to prompt many prospective buyers to accelerate their plans to purchase a property before the deadline. For first-time buyers and others looking to take advantage of the current lower rates, acting quickly could save thousands of pounds – particularly in regions where homes are more expensive.

It’s worth noting that, in the past, Stamp Duty changes have led to a surge in conveyancing transactions as buyers rush to complete before the new rules take effect. We have already seen an uptick in activity in recent months; first-time buyer demand has increased in London since the Autumn Budget, as only 8% of homes in London will be exempt from Stamp Duty for FTBs from April. Increased demand can put pressure on the property market and legal services, so early action is advisable. Buyers are encouraged to place an offer and instruct solicitors as soon as possible to improve their chances of completing before the deadline.

Preparing for the changes

Navigating the complexities of the property market is challenging enough without the added pressure of impending tax changes. Attwaters Jameson Hill’s team of specialists can help ensure you’re well-prepared for the reforms.

If you have questions about how the upcoming Stamp Duty changes might affect your property purchase, or if you’re ready to take the next step in the home-buying process, we are here to help. Contact our Residential Property team for expert legal advice on 0330 221 8855 or email residentialpropertydepartmentemail@attwaters.co.uk