First time buyers and the higher stamp duty to come

Slipping under the radar in the Government’s recent budget was the, if you like, ‘non-announcement’ over the current stamp duty discounts.  This means the discounts, in place since 2022, will end on the 1st of April 2025.  

While in the context of larger purchases, there won’t be a notable difference against the usual stamp duty bill, first time buyers (FTBs) are going to be particularly hit by the end of the discount scheme.  

If you are a FTB in London currently you don’t pay any stamp duty up to £425,000; and, for the amount between £425,000 and £625,000, stamp duty is charged at 5%.  

From 1st April, the threshold will drop; and, a FTB will now need to pay 5% for the portion between £300,000 to £500,000.  Furthermore, a FTB will not be entitled to the discount if they are buying a property over £500,000.  

For non-FTB, the threshold at which you start paying stamp duty will drop to £125,000 from £250,000.   

This means that anyone buying a London property will typically be paying £2500 more as the levy is 2% now between £125,000 to £250,000.  The rest of the bandings remain unchanged for non-FTBs.

Regular buyers

Up to 31st March 2025  

Up to £250,000                                                     Zero

Between £250,001 up to £925k                            5%

Between £925,001 up to £1.5m                            10%

The remaining amount  (above £1.5m)            12%  

From 1 April 2025  

Up to £125k Zero

Between £125k up to £250k                                    2%

Between £250,001 up to £925k                              5%

Between £925,001 up to £1.5m                              10%

The remaining amount (above £1.5m)              12%  

First time buyers

Current First Time Buyer (FTB) discount (up to 31 March 2025)  

Up to £425k                                                               Zero

Between 425,001 to £625k                                        5%

Price above £625k                                                 no relief        

FTB From 1 April 2025  

Up to £300k Zero Between £300,001 to £500k     5%

Price above £500k                                                    No relief  

The difference is stark for FTBs.  As the following examples testify, if you are a FTB and you don’t complete by 1st April 2025 you will be paying a difference of £6250 for a purchase at £425,000.

The more telling difference for FTBs is if you are buying in London at £625,000.  If you do not complete by 1st April next year, you are looking at £21,250 in stamp duty compared to the current rate of £10,000.  This is because the FTB discount will cease for any transaction over £500,000 compared to the current £625,000.

£425k purchase now

Zero rated to£ 425k= Nil Stamp

Total  ZERO    

£425k purchase after 1st April

Portion 125k @ 5% = £6250

Total  £6250  

625k purchase now

Zero rated to £425k= Nil Stamp

425k to £625k @ 5% = £10,000

Total £10,000    

625k purchase after 1st April

up to £125k = 0

£125 - £250k @2% = 2500

£250k to £625k @ 5%= £18,750

Total £21,250  

Michael Bolger, Area Sales Manager, thinks being prepared is critical to buyers in order to ensure they create the right framework to get their deal done.

“It takes around 8-12 weeks to get a transaction from point of sale agreed to completion.  You need to be prepared to have the right solicitor and the right mortgage broker involved to ensure your transaction will happen.

“If I was a first time buyer, I would be looking to get a deal agreed this side of Christmas and in the hands of solicitors. 

“You need to be really clear too when you are negotiating that you have a specific completion date in mind and that you are looking for the vendors to match that.  Given, if you don’t hit that completion date, in some cases you are looking at an increase of £10,000 in stamp duty.”  

If you are seeking advice on a transaction or would like to get your property onto the market now to attract first time buyers looking to move prior to next April please get in touch with Michael on the below details.  

Michael Bolger CeMAP | Area Sales Manager

Direct: 020 8752 3173

Branch: 020 8992 0333 opt 1

Mobile: 07957 444 261

Email: mbolger@goviewlondon.co.uk

24 Station Parade, Ealing, London, W5 3LD

27 Churchfield Rd, Acton, London, W3 6BD