First-time buyers and home-movers have just one month left to benefit from higher stamp duty thresholds.
If you aren’t already in the conveyancing process, it is likely that you will face a larger bill on your property purchase as stamp duty thresholds for first-time buyers and home movers are set to drop in April.
Currently, first-time buyers benefit from paying nothing on the first £425,000 of a property purchase. This will fall to £300,000 from April. Other buyers will pay stamp duty from £125,000, instead of the current £250,000 threshold.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The changes have caused a rush of transactions, pushing up house prices, as buyers look to save on property purchase costs.
Research by Rightmove suggests 25,000 first-time buyers in England who are currently going through the process of legally completing on a property purchase are predicted to miss the stamp duty deadline on 31 March and complete in April instead. This is based on the typical speed of sales in the areas where homes are currently under offer. Failing to complete before April will add thousands to the cost of a purchase.
That is on top of other rising moving costs such as paying for surveys and removals.
An average home-mover in England will face an extra £2,500 in stamp duty costs from April. However, while first-time buyers of homes priced at £300,000 or less will continue to pay no stamp duty, Rightmove warns that first-time buyers of homes priced between £500,001 and £625,000 are the most affected group of all, facing an extra £11,250 in costs.
Property website Zoopla estimates that 83% of homebuyers currently looking for a home will pay more Stamp Duty from April 2025, up from the 49% of potential purchasers now.
How much does it cost to move home in the UK?
Beyond the mortgage deposit and property price, there are plenty of upfront costs when buying a home.
Buyers often need to pay legal fees as well as for surveys and removals.
You may also need to pay estate agency fees if you are also selling a property.
Analysis by reallymoving, based on quote requests on its comparison website, found homeowners buying and selling a property in 2024 need to pay £13,978 in upfront expenses.
This includes stamp duty, conveyancing, estate agent fees, a Level 2 homebuyer survey, an energy performance certificate and removals costs.
Much of the cost is linked to house prices.
Movers in the North East of England pay the least, with a home move costing £5,492, while those in the capital are paying £30,048 on average.
Are home moving costs rising?
As house prices rise, the cost of moving will naturally also increase.
That isn’t really the Labour government’s fault. But its stamp duty policy will have a factor on what people pay to move.
It plans to lower stamp duty thresholds from April 2025.
First-time buyer relief will drop from £425,000 to £325,000 while those selling and moving up the ladder will pay stamp duty from £125,000 rather than the existing £250,000, with the 2% rate set to return.
Analysis by Zoopla shows a third of buyers are currently searching within the £125,000 to £250,000 price range and the impact will be more keenly felt in the Midlands and Northern England, where up to 67% of sales sit in this bracket.
Almost half of sales above the £250,000 threshold will pay an extra £2,500 per sale, Zoopla said.
An additional 20% of first-time buyers will also become liable for stamp duty, according to the research, mainly falling on those in southern England due to the 30% and 34% of first-time buyers in the East, South East and London regions looking to buy homes in the £300,000 to £425,000 price band.
Zoopla warns. that higher buying costs will be reflected in what homebuyers are prepared to pay in 2025, resulting in a drag on house price growth of up to 1%,
Reallymoving suggests that lowering the stamp duty thresholds will see the cost of moving jump to £16,478.
Movers in the North East and Northern Ireland, who currently benefit from paying no stamp duty based on the median purchase price, will be forced to pay £2,400 and £2,500 respectively when the lower threshold is restored.
The proportion of first-time buyers paying the property tax will also more than double from 17% currently to 39%, according to the research.
“Raising almost £14,000 to finance a home move is a major challenge for many people, especially with the cost of living so high making it even harder to save,” says Rob Houghton, founder of reallymoving.
“We’ve seen an increase in the proportion of first-time buyer activity in the past few weeks as people accelerate plans to move to take advantage of lower stamp duty bills before they rise next spring, but the window will be too tight for many, so it’s wise to budget for higher stamp duty costs just in case.”
He suggests it is always important to shop around to secure the best deals for conveyancing, surveying and removals, paying close attention to reviews as well as price.
-
Widow’s warning: Are you missing out on up to £11,000 in inherited state pension?If your late spouse built up contributions under the old state pension, you could be entitled to inherit a portion of it. What are the rules and are you eligible?
-
How much should I have in savings? Average savings by ageWe look at how much you should aim to have in your savings at every decade of your life, and how you can go about achieving this.
