Four in five homebuyers to pay more stamp duty from April

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Four in five homebuyers to pay more stamp duty from April

The cost of buying a home in the *** will rise for most homebuyers from April, with new analysis revealing that four in five homeowners England and Northern Ireland will pay more stamp duty.

The 2% rate between £125,000 and £250,000 will return in April, in a blow to the *** property market. Currently, only 49% of homeowners are liable for stamp duty, but this proportion will surge to 83% once the revised rules take effect. As a result, many will face a higher stamp duty burden, amounting to an extra £2,500 on purchases that cost between £125,000 and £250,000.

The changes will generate an additional £1.1bn annually for the government, according to property site Zoopla.

Read more: Homeowners hit with £243 monthly rise at end of fixed-rate mortgages

Only 17% will remain exempt from stamp duty after the changes, which will impact homeowners purchasing properties over £250,000.

The changes will have different effects regionally, with the West Midlands seeing the largest increase, with the number of homeowners liable for stamp duty surging by 66%, followed by the East Midlands (55%) and the North West (50%).

The impact will vary across the ***. In the North East just 7% of homeowners currently pay stamp duty, but this will rise to 40% from April. Meanwhile, homeowners in London face the highest stamp duty rates, with 97% of sales expected to be subject to the tax by April. The regions most affected by the return of the 2% band are the South West and Eastern England, where the percentage of sales paying stamp duty will increase by 41% and 21% respectively.

First-time buyers will also see an increase in the proportion liable for stamp duty. Under current rules, 21% of first-time buyers pay stamp duty. However, by April 2025, this will double to 42%, with the increase most acutely felt by those purchasing homes in London and the South East. Purchases between £300,000 and £625,000 will see an increase in tax liability, with costs of up to £15,000 per purchase. Buying at £350,000 will cost £2,500 per purchase, up from £0 today.

Buying a £500,000 home will cost £10,000 in stamp duty, up from £3,750 today and buying at £550,000 will jump from £6,250 to £15,000.

Read more: Average *** house price rises to almost £368,000

Yet, 58% of first-time buyers will remain exempt from stamp duty on purchases of homes priced under £300,000, benefiting those buying in areas with lower property values, such as the North East and North West.

The number of first-time buyers liable to pay stamp duty will be the lowest in the North East (2%), Yorkshire and the Humber (3%), Northern Ireland (5%) and the North West (5%).

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Richard Donnell, executive director at Zoopla, said: “Stamp duty has become a big source of tax revenue, approaching £10bn a year for the government. The reduction in tax reliefs from April will see more homebuyers paying stamp duty.”

Donnell added: “Existing homeowners will pay up to £2,500 more for each purchase across a large number of sales. The average seller has made £60,000 in capital gains, so there is flexibility to absorb this cost, but buyers will expect to factor this extra cost into what they offer.

“It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the hardest, where buying costs are already high. This will reduce buying power and market activity at a local level.”

Read more: How to complete on a property before stamp duty deadline in March

He also warned that stamp duty continues to be a major tax burden, particularly in southern England, where affordability challenges are already pressing. “The case for reforming stamp duty remains, but the question is where to replace the multi-billion-pound tax revenues,” Donnell said.

Stamp duty applies in England and Northern Ireland. In Scotland — where the tax is referred to as land and buildings transaction tax — buyers are required to pay if the property’s value is above £145,000, or over £175,000 for first-time buyers.

In Wales, the stamp duty, known as transaction tax, applies to properties valued over £225,000.

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