17 Sep, 2024/ by Homeward Legal /First Time Buyer, News
When it comes to buying a home, your lot as a first-time buyer really isn't a happy one.
Aiming to get a mortgage to purchase that elusive first property is compounded by the increasing inequity between the average house price and the average wage or salary that you earn. Trying to find a deposit, too, is fraught with difficulty, particularly if you are currently renting, because of the high rent rates to do so.
But there is another problem beating its drum loudly over the horizon: an increase in Stamp Duty Land Tax (SDLT, or stamp duty as often referred to).
The last government restructured the then SDLT rates after the impact of the 2022 mini-budget, so that buyers only started to pay the tax on house prices over the threshold of £425,000. This is quite a high figure, and most purchases for the first-time buyer would easily fit underneath this value, so that you wouldn't have to pay any duty on your purchase.
The sting in the tail is that the same decision stated that the SDLT rates would revert to their previous status by the end of March 2025, which means that purchases over the value of £250,000 would once again be liable for paying SDLT - an additional expense in an already difficult market for first-time buyers.
On top of that, and assuming you have accumulated the necessary cash and loans to do so, any purchase with an agreed price of between £500,000 and £625,000 will also lose the relief that you are currently entitled to.
According to an assessment by online property portal Zoopla, about a third of first-time buyers will be required to pay the SDLT once the 31 March 2025 deadline has been reached. They also note that certain first-time buyers may be able to save £15,000 if they were able to complete before then, although that figure will not be the same for everybody, since the amount depends on the agreed value of the house that is due to be paid.
It's also worth noting that different parts of the country are affected by the SDLT changes. For example, house prices in London and the South-East are going to be higher than those in some of the northern regions.
Zoopla have created a table highlighting their analysis for these discrepancies, which should help you to understand SDLT and how the changes might impact you if you were unable to buy a property before the deadline.
Region | Average house price FTBs are looking to buy | Current FTB SDLT bill | FTB SDLT bill from 1 April 2025 | Difference |
London | £622,500 | £9,875 | £24,875 | £15,000 |
Hammersmith & Fulham | £550,000 | £6,250 | £21,250 | £15,000 |
Islington | £525,000 | £5,000 | £20,000 | £15,000 |
South-East (Elmbridge as example) | £450,000 | £1,250 | £7,500 | £6,250 |
Epsom & Sewell | £425,000 | £0 | £6,250 | £6,250 |
Windsor & Maidenhead | £425,000 | £0 | £6,250 | £6,250 |
East of England (Hertsmere as example) | £450,000 | £1,250 | £7,500 | £,6,250 |
Three Rivers | £435,000 | £500 | £6,750 | £6,250 |
Cambridge | £425,000 | £0 | £6,250 | £6,250 |
Source: Zoopla
What can you do as a first-time buyer?
Because the process of buying a new home reasonably takes an average of three to four months from the time of agreeing a purchase price to reaching the completion date, and allowing some time to look for your chosen property, Zoopla says that you have about two months from now to get the process moving, before you are at risk of reaching the changed thresholds and having to pay a significant sum.
Izabella Lubowiecka, Senior Property Researcher at Zoopla, comments:
“Thousands of first-time buyers have benefitted from the relief in stamp duty introduced in 2022.
“With just two months to go, those looking to purchase their first home should act this Autumn if they are to avoid paying more in stamp duty, particularly if they are looking to purchase a home in Southern England, an area where first-time buyers are likely to see a sizable increase in SDLT once the changes come into effect next April.
“Those not looking to purchase until after 1st April, should make sure they build the additional stamp duty fees into their plans and account for it in their overall budgets.”
You next steps
- Get looking for your property, but don't rush into any decisions immediately based solely on trying to avoid the extra stamp duty costs.
- Line up a good, quality conveyancing solicitor as soon as you have found a property that you would like to purchase.
- Organise your mortgage as early as possible, and consider using a mortgage broker to provide guidance.
- Think about the survey so that you know what problems and issues there are, so that you can add any associated costs to remedy problems to your overall budget.
- Account for all the expenses, not only of buying and moving into your new home, but also for all the ongoing costs, such as maintenance, utilities, council tax, and so on.
Need a focused conveyancing solicitor, who will perform a high-quality job at a value-for-money price, and who will make every effort to drive your planned purchase onwards?
That's where you can rely on the experts at Homeward Legal!
They will start work on your planned purchase as soon as you agree to the quotation and appoint them to represent you.
Homeward Legal will also provide a quote that will not change - what you are quoted is what you pay for standard conveyancing process.
There are some unforeseen items that might arise during the purchase and/or sale, but the solicitor discusses these and their cost as they come up.
In addition, to protect the homebuyer further, Homeward Legal operates a ‘no completion, no fee' promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.
Call to get your conveyancing quote started, or to discuss your concerns with your plans to move.
Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.