First-time buyers race to save thousands as tax changes loom

First-time buyers are rushing to get on to the property ladder before changes to stamp duty come into force.

Stamp duty thresholds will change on 1 April, resulting in first-time buyers in more expensive areas paying thousands more in tax. 

Here, we explain how the upcoming changes are already influencing the property market, and get advice on securing a discount when buying a home.

Buyers race to beat the stamp duty deadline

Research by the estate agency Hamptons shows 26% of first-time buyers will need to pay stamp duty from April, compared to just 8% now. 

Stamp duty changes from 1 April

Stamp duty is a tax payable when purchasing property or land in England or Northern Ireland.

Since September 2022, a temporary relief has been in place for first-time buyers and home movers. However, this is due to end on 31 March.

Currently, first-time buyers purchasing a property worth up to £625,000 only need to pay stamp duty on the amount above £425,000.

On 1 April, these thresholds will be reduced. The £625,000 exemption will drop to £500,000, and the point at which stamp duty applies will fall from £425,000 to £300,000. 

For existing homeowners, the tax-free threshold will also decrease. Currently, stamp duty is only paid on amounts above £250,000, but from April, this will drop to £125,000.

Find out more: 

Regional effects of stamp duty changes

To investigate the potential impact of the changes, we analysed Land Registry data from 318 local authorities. For our calculations, we looked at average house prices from the last available quarter.

Currently, existing homeowners don't pay any stamp duty on an average-priced home in 91 local authorities (29%). However, from 1 April, they'll need to pay stamp duty in every local authority we analysed.

Excluding London boroughs, first-time buyers currently pay stamp duty on the average-priced property in 53 local authorities (19%). From 1 April, this will rise to 46%, with the tax payable in an additional 92 areas.

Is it too late to beat the tax hike?

If you are in the early stages of buying, it is very unlikely that you will be able to complete before the deadline. 

Zoopla estimates that it takes between 15 and 20 weeks in total to purchase a home, and in some instances the process can take much longer.

How will the changes impact sellers? 

With buyers facing larger tax bills and mortgage rates remaining stubbornly high, it is important to price your home competitively to attract interest.An experienced estate agent with a track record of selling similar properties in your area can provide valuable guidance on local market trends.You can also check property portals such as Rightmove and Zoopla to see what kinds of properties are on the market in your area, and the prices sellers are asking for them. Find out more:undefined

source https://www.which.co.uk/news/article/first-time-buyers-race-to-save-thousands-as-tax-changes-loom-a4xTd2b8hf6Z