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Stamp Duty cliff edge warning: "That is a massive difference of £6250 in tax payable"

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ended 26. September 2024

Brokers have warned that many prospective buyers, especially first-time buyers, have forgotten the looming increase to Stamp Duty, with one, Tony Castle, Managing Director at PFG Mortgages, saying: “Stamp duty increases seems to have slipped under the radar for many.”

Meanwhile, Michelle Lawson, Director at Lawson Financial, warned: “Amid the noise of falling mortgage rates, the Stamp Duty cliff edge appears to have been forgotten. With many first-time buyers saving hard for a deposit, as it stands a more significant chunk of the savings will go to pay tax after April 2025. For a first-time buyer, if they purchase a property up to £425k, it’s currently nil SDLT, which will become £6250 from 1st April. On a property value of £450k, the current liability would be £1,250 which would then jump up to £7,500. That is a massive difference of £6250 in tax payable."

Stamp Duty is currently set to increase again from 1st April 2025 with the £250k threshold reducing back down to £125k and the nil rate threshold for first-time buyers reducing to £300k from £425k. This is without any changes within the Budget, if any, on 30th October.

Newspage asked brokers whether buyers should act now to beat the 31st March 2025 deadline or buy when the time is right?

12 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
Amid the noise of falling mortgage rates, the Stamp Duty cliff edge appears to have been forgotten. Anyone considering buying or moving, particularly first-time buyers, should think about starting the process sooner rather than later. Transaction times are taking longer than ever before and, unless there are further changes in the upcoming Budget, the end of March won't take long to come around and there will be a rush for completions to avoid the higher tax. As soon as October hits there may also be a last push to get transactions over the line pre-Budget. With many first-time buyers saving hard for a deposit, as it stands a more significant chunk of the savings will go to pay tax after April 2025. For a first-time buyer, if they purchase a property up to £425k, it’s currently nil SDLT, which will become £6250 from 1st April. On a property value of £450k, the current liability would be £1,250 which would then jump up to £7,500. That is a massive difference of £6250 in tax payable.
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Tony Castle
Managing Director at PFG Mortgages
Stamp duty increases seems to have slipped under the radar for many but people need to have them on their radars as the additional costs could be punitive.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
With all the talk of potential new tax raids in the forthcoming Budget, the cliff edge in place for stamp duty is being overlooked by many. However, this could have a substantial impact on the financials of many home moves and could apply the brakes to the property market train. With the government looking to save every penny, it’s unlikely they will announce a reprieve to these forthcoming changes.
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Kim McGinley
Director & Specialist Broker at VIBE Finance
With the upcoming increase in Stamp Duty from 1st April 2025 and thresholds set to reduce, there's understandable anxiety among both mortgage buyers and first-time buyers. We’re already seeing a push from those looking to beat the 31st March deadline, especially with uncertainty surrounding the upcoming Budget. There's a sense of urgency to get transactions through, but at the same time, we have to acknowledge that much of this could be speculation. The Government hasn’t given any clear signals, which only adds to the uncertainty. For now, I’d advise buyers to stay informed, but not to make rushed decisions until we have clearer details on what the Budget will actually deliver.
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Mark Eaton
COO at April Mortgages
Demand has been increasing in recent months as confidence in the property market returns. This is especially the case among first-time buyers who are snapping up the properties landlords are increasingly offloading. While higher loan to income multiples and lower mortgage rates are one factor driving demand, another is the looming change to stamp duty, which will add a not insignificant amount to many people’s transaction costs. For first-time buyers, every penny counts and the stamp duty deadline in the spring of 2025 is almost certainly feeding through into demand.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
As the budget looms, Britain's property market is experiencing a surge of activity. Many buyers are scrambling to complete purchases before potential changes to the stamp duty threshold, creating a frenzied atmosphere in an otherwise cooling market. The stamp duty holiday, introduced in September 2022, has provided significant relief for homebuyers. However, with this set to revert in early 2025, there is a sense of urgency among buyers who fear the budget may present an opportunity to enact these changes earlier. This uncertainty has injected a dose of adrenaline into the property market, with many buyers engaged in a high-stakes game of beat the clock, where buyers are gambling against time and the taxman. Whether this frantic activity will lead to a sustained market recovery or a sharp correction post-April 2025 remains to be seen. However, the next few months will be crucial, as the property market enters a potentially volatile period, where the landscape could shift dramatically.
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Chris Barry
Director at Thomas Legal
Following the start of Labour's term, we saw a sharp rise in clients wanting to sell or transfer equity before the autumn Budget as fears of a rise in CGT and a tax on investors grew. However, in recent days, we are receiving a high-level of new enquiries from buyers asking us to complete before the 30th October driven by fears of negative changes to Stamp Duty percentages and thresholds. There are many rumours circulating around what a potential SDLT change may look like, but the consensus is that any potential change will be designed to generate revenue for the state rather than incentivising people to buy. Whilst I think a change to SDLT in this Budget is unlikely, we can not share speculation and instead need to work to the desired deadlines for our clients. When October property data is released, I think it will show a spike in activity and a rise in the average property price.
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Craig Fish
Director at Lodestone Mortgages
This stamp duty change is big, increasing purchase costs by up to £2,500. First-time buyers are already struggling and this is likely to impact them the most so its advisable to get in asap before the changes come into effect. The average transaction takes around three months to complete, so the end of December is the cut off to complete in time.
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Simon Bridgland
Director at Charwin Private Clients
Cynics would say that Rachel Reeves will simply let the threshold return to the normal levels that most have forgotten about. Her silence will only be broken at the Budget. I would not be surprised to see something along the lines of a renewed relief being given to FTBs but for new build, only if purchased through the soon-to-be-let-loose MADE Partnership. With all the smoke and mirrors about the 1.5M new build which Labour have promised, they will need to coerce buyers to make use of the scheme. If I were looking to buy, I'd crack on now or be ready for change. Rachel Reeves has her thumb screws ready.
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Dariusz Karpowicz
Director at Albion Financial Advice
The upcoming Stamp Duty changes are flying under the radar, but the reduction in thresholds set for April 2025 could have a significant impact on buyers, particularly first-time buyers. This "forgotten" cliff edge is something buyers should start paying attention to, as it could cost them more in the near future. While there’s a noticeable increase in mortgage enquiries, it seems more linked to improving economic conditions, lower inflation, and lenders cutting rates rather than a rush to beat the stamp duty deadline. However, with the Budget looming, who knows what surprises are in store?
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
If you want to save some money, rather than give it to HMRC, then act sooner rather than later. With local authorities taking around 25 working days on average (a recent bit of research showed the worst to currently be at 50-60 working days!) to reply to any enquiries from conveyancers, buying a new home is far from a speedy process, so people wanting to beat the deadline and secure a lower tax bill need to ensure they don't hang around. It makes perfect sense to wait and see what the upcoming budget brings, but assuming there are no radical changes then act soon after, don't wait until the New Year, as we could see a glut of people all looking to do the same thing, which will clog up the system even further and mean transactions take even longer to go through, resulting in lots of people likely missing the deadline.
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Patricia McGirr
Founder at Repossession Rescue Network
Saving money is savvy in any market, however, 'fools rush in where angels fear to tread.' The same goes for property buying. Beating Stamp Duty hikes may create additional pressure to commit now, but borrowers should not let hype dictate their next move. First-time buyers shouldn’t be scrambling to beat a deadline, they should be focusing on getting the right home, not just any home. This is about power-buying, not panic-buying. Saving money now could result in buyers remorse later.