House prices are set to be slashed and lower offers accepted ahead of upcoming changes to stamp duty. People eager to beat the end of the so-called ‘stamp duty holiday’ are expected to agree to reduced deals so they can complete their sale and new purchase in time, while many first-time buyers will also be frantically searching to secure a new home before are faced with paying the tax.
Stamp Duty Land Tax (SDLT) is charged on property purchases in England and Northern Ireland that meet certain thresholds. The levels at which it starts to be charged are being dramatically lowered in just three months, snaring many buyers who would previously have been exempt.
Chancellor Rachel Reeves announced in the October Budget that the stamp duty holiday would stop at the end of March 2025 after being first announced back in July 2020. At present, buyers of homes worth less than £250,000 don’t pay any stamp duty. This was doubled from £125,000 under Liz Truss’s mini-Budget in September 2022.
The stamp duty threshold where the tax begins to be charged is currently £425,000 for first-time buyers after being raised from £300,000 in the mini-Budget. Both these higher thresholds will end in March 2025 and revert to previous levels, which we have listed in full below.
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Jonathan Bone, head of mortgages at Better.co.uk, says a rush of activity and panic is expected among those looking to beat the deadline and complete before the new rates come into effect on April 1. This could mean some great deals are on offer to buyers as sellers reduce their asking prices and become far more flexible with offers for their properties.
The upcoming lowering of the nil rate stamp duty threshold is also expected to result in a flurry of first-time buyer activity. Younger buyers in their 20s and 30s are most likely to be actively property-hunting ahead of the change, though they will still have a £300,000 limit after April before the tax starts to be applied.
Analysts point out that the additional cost of stamp duty can deter people from relocating, even when job opportunities, better school catchment areas, or more suitable living conditions are on offer.
Stamp duty rates up to March 31, 2025
Up to £250,000: Zero
The next £675,000 (from £250,001 to £925,000): 5 per cent
The next £575,000 (from £925,001 to £1.5 million): 10 per cent
The remaining amount (above £1.5 million): 12 per cent
Stamp duty rates from April 1, 2025
Up to £125,000: Zero
The next £125,000 (from £125,001 to £250,000): 2 per cent
The next £675,000 (from £250,001 to £925,000): 5 per cent
The next £575,000 (from £925,001 to £1.5 million): 10 per cent
The remaining amount (above £1.5 million): 12 per cent
Stamp duty rates for first-time buyers
If you’re buying your first home, you can claim a discount (known as ‘relief’). You are eligible if you and anyone else you’re making the purchase with are first-time buyers.
Discount up to March 31, 2025
You will pay:
- no SDLT up to £425,000
- 5 per cent SDLT on the portion from £425,001 to £625,000
If the price is over £625,000, you cannot claim the relief and must follow the same rules as those above for people who’ve bought a home before.
Discount from April 1, 2025
You will pay:
- no SDLT up to £300,000
- 5 per cent SDLT on the portion from £300,001 to £500,000
If the price is over £500,000, you cannot claim the relief and must follow the same rules as those above for people who’ve bought a home before.
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