Planning to buy your first home or move up the property ladder?
Significant changes to stamp duty will take effect in April 2025, potentially raising bills for first-time buyers and home movers. First-time buyers will be most affected, with their costs potentially rising by thousands of pounds.
Some commentators are especially urging first-time buyers to get their property purchase completed before the end of March 2025 to avoid these substantial new charges. For some, the adjustments could mean stamp duty bills increasing by over £10,000—a staggering figure for those just stepping onto the property ladder.
Revised thresholds for first-time buyers
Currently, first-time buyers benefit from special stamp duty relief. This ensures no stamp duty is paid on properties priced up to £425,000. For properties priced between £425,001 and £625,000, a 5% tax is applied to the portion within that range, while homes over £625,000 attract standard stamp duty rates with no relief offered.
However, starting on 1 April 2025, this relief will be significantly reduced. First-time buyers will only pay zero tax on properties priced up to £300,000. A 5% tax will then apply to the portion priced between £300,001 and £500,000. Anything above £500,000 will no longer benefit from relief. This is a significant drop from the current higher threshold of £625,000.
Understanding the reasons for the changes
The impending changes stem from temporary measures introduced in 2022 during a period of heightened economic pressure. These measures, aimed at supporting first-time buyers, will expire on 31 March 2025, returning the thresholds to previous levels.
High property value regions such as London, the South East, and the East of England are already witnessing increased buyer demand as people rush to avoid the tighter rules. According to research, areas with the highest property prices could see the greatest disparity post-2025. For instance, currently, around 8% of homes listed in London are stamp duty-free for first-time buyers—a figure set to decline further when the thresholds revert.
Region-specific implications for buyers
The impacts on stamp duty payments will vary depending on the region and property value. For example, the average cost of a first-time buyer property in London stands at £411,900. Under current rules, no stamp duty is due for properties priced at this level. However, from April 2025, buyers will need to pay £5,595 in stamp duty.
Similarly, in the South East, a home valued at £327,700 would currently be exempt from stamp duty for first-time buyers. Post-2025, the same property would incur a £1,385 bill. Buyers looking at properties priced between £500,000 and £625,000 will also be significantly impacted, with those purchasing after April 2025 facing far higher bills due to tax relief no longer applying beyond £500,000.
Practical examples of rising costs
To illustrate the dramatic changes, a first-time buyer purchasing a property valued at £625,000 today would face a stamp duty bill of £10,000. After 1 April 2025, however, the same purchase would attract a staggering £21,250 bill—a sharp £11,250 increase simply from the revised thresholds.
Home movers are not immune to these changes either.
While exact implications may vary, many buyers upgrading to larger homes or relocating to pricier areas will likely contend with heftier stamp duty payments alongside other moving costs.
Advice for potential buyers
For those hoping to buy before the changes take effect, timing is crucial. The average time to complete a home purchase can range several months, so starting early will be essential. Assessing your financial position is a key first step. Knowing how much you could borrow will help set realistic expectations.
There are government schemes designed to assist buyers, such as the Mortgage Guarantee and Own New Rate Reducer schemes. Additionally, a ‘mortgage in principle’—indicating how much a lender might offer—can strengthen your position when negotiating.
Final thoughts and next steps
With less than a few months until these stamp duty changes come into effect, now is the time to act if you’re planning to buy your first home or move up the property ladder. Careful planning and timely decision-making could save you thousands.
