First-time buyers in almost a third of local authorities in England will see the cost of buying a home rise next year when stamp duty thresholds reduce.
Increases in the amount of stamp duty paid from 1 April next year range from £100 in areas such as Adur, Stratford-upon-Avon and Cherwell to £6,000 in the London boroughs of Redbridge and Newham and the city of Cambridge, according to analysis by mortgage broker Alexander Hall.
Hopes that the temporary stamp duty thresholds, raised two years ago, would be extended or made permanent were dashed last week when Chancellor Rachel Reeves made no mention of the land tax in the Autumn Budget.
That means from 1 April 2025, the threshold at which first-time buyers must start paying stamp duty will be lowered from £425,000 to £300,000, while homeowners moving house will see their stamp duty threshold reduced from £250,000 to £125,000.
Consequently, the average first-time buyer across 93 local authorities is set to see an increase in their stamp duty bill when purchasing, equating to 31% of the total market in England.
In almost a quarter of the market, first-time buyers who were exempt under the current rules because they were purchasing a property priced between £300,000 and £425,000 will face a stamp duty bill next year.
An intermediary’s guide to understanding client vulnerability
Sponsored by Halifax Intermediaries
Furthermore, the maximum price of a property eligible for first-time buyer relief will fall from £625,000 to £500,000.
There are four local authorities in England – Hackney, Richmond, Wandsworth and Kingston – where first-time buyers currently benefit from a degree of stamp duty relief due to the average house price sitting between £500,000 and £625,000, but will not next April. Instead, the average buyer in these London boroughs will see their stamp duty bills climb by £11,250.
Favourable market landscape
The majority of first-time buyers are likely to be unaffected as the average first-time buyer house price sits below £300,000 in 68% of local authorities in England.
Richard Merrett, managing director of Alexander Hall, said that while some first-time buyers may see a rise in their stamp duty costs, improved conditions in the mortgage market should help with affordability pressures.
He added: “First-time buyers are currently benefitting from a more favourable mortgage market landscape where we have seen lots of focused innovations from lenders specifically for the FTB market, and, with further interest rate cuts forecast, they should continue to see an increased level of mortgage affordability.
“Getting a whole-of-market view is the best way to ensure that they secure the best mortgage deal possible and, in doing so, it could well mitigate the increased cost of stamp duty with the money they save on their monthly mortgage repayments.”
