Despite extended tax-free limits, over 20% of first-time home buyers are still paying Stamp Duty this year.
- Properties over £425,000 require first-time buyers to pay Stamp Duty, a limit dropping to £300,000 in March 2025.
- Average home prices in London compel first-time buyers to pay between £1,822 and £8,072 in Stamp Duty.
- The Chancellor’s recent Budget did not address the permanence of Stamp Duty thresholds for new buyers.
- Many new buyers may turn to family assistance as Stamp Duty obligations increase next year.
More than one in five first-time home buyers have faced the unexpected cost of Stamp Duty this year, according to an analysis conducted by the Coventry Building Society. This occurs despite the temporary extension of nil-rate thresholds, highlighting the financial burdens on new homeowners.
Currently, first-time buyers become liable for Stamp Duty on homes priced over £425,000. However, this threshold is set to reduce to £300,000 in March 2025, potentially increasing financial pressures on potential homebuyers.
In London, the average price of a first-time buyer’s home is £461,450. This results in Stamp Duty expenses ranging from £1,822 to £8,072, depending on when the purchase is completed. These figures underscore the financial hurdles faced by buyers in the capital.
The absence of any permanent adjustment to the Stamp Duty thresholds in the latest Budget announcement adds to the challenges faced by aspiring homeowners. Jonathan Stinton from Coventry Building Society commented that buyers in London could face an additional £6,000 in taxes by next April, making it crucial for buyers to plan ahead.
With the significant rise in taxes, many aspiring first-time homeowners might increasingly depend on family support to bridge financial gaps, further stressing the so-called ‘Bank of Mum and Dad’. The looming changes necessitate timely decision-making for those planning to purchase homes soon.
The increased Stamp Duty fees highlight the financial challenges new buyers might continue to face.
