- First-time buyers have 8 months to save on stamp duty
- Current exemption: No tax up to £425,000
- Threshold reverts to £300,000 in April 2025
First-time buyers have eight months to take advantage of the current stamp duty land tax regulations and save hundreds of pounds on home purchases.
A first-time buyer pays no stamp duty on a home worth up to £425,000. If their residence is more expensive, they only pay tax greater than £425,000.
However, this ceiling, which has been at its present level since 2022, is set to return to the previous barrier of £300,000 in April 2025.
When the criteria change, a first-time buyer purchasing a £425,000 home will shift from paying nothing to £6,250 in stamp duty.
With the average house purchase taking about three months after an offer is accepted, people looking to minimize the tax should start planning sooner rather than later.
According to Office for National Statistics data, the average house price is roughly £285,000, and according to a separate UK Finance study, approximately one-third of first-time buyers acquire properties worth more than £300,000.
According to Rightmove, when the previous standards revert next April, only 37% of houses for sale in England will require no stamp duty for a first-time buyer, up from 58% currently.
Where will first-time buyers be the most brutal hit?
Based on the average asking price of £373,493, a typical first-time buyer will pay £3,675 in stamp duty in 2025, compared to zero today.
Many homes sell for less than their asking price so that the actual amount may be slightly lower, but many more are expected to fall into the stamp duty net.
It will exacerbate the misery of rising mortgage rates, already burdening first-time buyers’ budgets and limiting the amount they can borrow.
When the laws alter, those looking to buy in the more costly sections of the country would be hit the hardest.
According to Rightmove, if the old levels are reinstated, fewer than one in ten homes in London will be free of stamp duty charges for first-time purchasers in April 2025, compared to a quarter currently.
The shift would hurt the South West and East of England.
In the South West, 58% of properties are stamp duty-free for first-time buyers. By April, that figure will have dropped to 34% of all houses.
However, the North East of England will be the least affected. Currently, 86 percent of the residences would be stamp duty-free for first-time buyers. Next year, that figure will drop to 74% of houses.
You can use our stamp duty calculator to see how much stamp duty you will now pay, but in general, first-time purchasers pay nothing on the first £425,000 and 5% on the next £425,001–£625,000.
Those who pay more than that amount cannot get the relief and must follow the exact requirements as non-first-time buyers.
The graph below depicts the number of residences in each region that will be exempt from stamp duty for first-time buyers, providing the threshold is reinstated at £300,000.
Will the administration alter the stamp duty rules?
The Labour government has yet to commit to prolonging the stamp duty thresholds beyond the end of March next year.
Aside from Labour’s lofty goal of 1.5 million homes over the next five years and its commitment to overhaul the planning system, the party claims it intends to put more properties in the hands of first-time buyers.
The present mortgage guarantee policy, which encourages banks to lend to people with tiny deposits, is expected to be maintained under the new government’s plans.
Labour also intends to give locals first dibs on new developments, ending what it calls ‘the farce of entire developments being sold off to overseas investors’ before locals have a say.
Rightmove’s CEO, Johan Svanstrom, believes the government should also consider preserving the stamp-duty thresholds and providing additional assistance to first-time buyers.
‘We appreciate the new government’s real objectives to increase housing supply,’ said Svanstrom.
‘It should examine consumer assistance measures, such as maintaining the current first-time buyer stamp duty relief threshold of £425,000 in England and looking into solutions to assist first-time buyers with not only their deposit but also their ability to borrow enough from a lender. Mobility and housing are crucial growth drivers for the broader economy.
Tim Bannister, a property specialist at Rightmove, added: “The housing market is made up of many connected pieces – as owning your first home becomes more difficult, some people rent for longer periods, putting additional strain on the rental sector.”
Stamp duty is a barrier to movement, and maintaining the current criteria is a logical step toward providing some first-time buyer support.
How about home movers?
Home movers and first-time purchasers stand to lose money when the thresholds reverse in April.
Home movers presently pay stamp duty on homes worth more than £250,000, but this will be reduced to £125,000 in March 2025, bringing the tax payment on an average-priced home in England from £2,619 to £5,119, according to a Coventry Building Society study.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “The new government has been fairly mute on stamp duty so far, but silence isn’t golden when it could end up costing homebuyers thousands of pounds in additional tax.”
‘If we don’t hear anything by next April, those intending to buy an average-priced home will have to pay an extra £2,500 in property tax.
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The next Budget might come as early as September, and we want to see the incoming Chancellor lay out an ambitious, long-term plan for property tax that would provide clarity to anyone considering buying or selling a home.
‘There are only eight months until the interim property tax levels are cut in half to £125,000, leaving all but a few buyers with higher upfront tax obligations. The April deadline poses a risk of property market distortion.
‘Within the next few months, purchasers will be increasingly inclined to rush through purchases to avoid a significant tax hike, resulting in a flurry of activity followed by a dramatic decline after the relief period ends.
‘This swell and burst impact isn’t going to assist in developing long-term market stability, so stamp duty should be a top focus for the Chancellor when planning the next Budget.’
