Buyer activity is currently surging in light of the 1 April deadline, after which point stamp duty thresholds will be lowered from £425,000 to £300,000 for first-time buyers and £250,000 to £125,000 for second-time buyers. Such activity underlines the trepidation customers and industry experts have towards the post-April property market – a period that property agents predict exhibiting lower levels of property transaction activity.
What Do the Figures Show?
Approximately 550,000 homebuyers are attempting to secure their property transactions before 1 April. Crucially, this is a 139,000 increase in the volume of homebuyers attempting to purchase property compared to the previous year.
Such a rush is partly attributed to the healthier economic environment that is enabling mortgage rates to slowly fall. Just last week two major mortgage lenders, Barclays and Santander, were offering sub-4% deals for some mortgage schemes. This is a positive sign that mortgage lenders are more confident of the state of the property market.
Yet one cannot overlook the consequences that lowered stamp duty thresholds will bring to the property market. Zoopla identifies that 83% of second-time buyers will be paying stamp duty from 1 April, up from 49% as of now. To put this into perspective, a second-time buyer purchasing a property at £250,000 will be paying £2,500 instead of no stamp duty.
Overall, this is expected to generate an additional £900 million in stamp duty revenue. As the Office for Budget Responsibility forecasts, the overall revenue that will be generated in 2030 will be around £18.1 million, up from nearly £13 billion in 2024.
Given this surge in property acquisition activity, some may miss out on securing property before the 1 April deadline. According to TwentyCi, a third of those who have accepted offers may be liable to pay post-April stamp duty if the transaction process isn’t completed before April.
Because of this deadline concern, Nina Harrison, the London property specialist at Haringtons, has observed customers ‘bombarding their solicitors and agents with non-stop WhatsApp messages to expedite the process.’
How Much Will the Lowered Stamp Duty Thresholds Cost the Average Buyer?
The urgency underpinning the surge in market activity engenders concern over the post-April property landscape. The Office for National Statistics identifies that the average house price in England is £291,000, up 4.3% from the previous year.
Some regions, however, have much higher regional average property prices: London at £548,939, remaining at 0.0% annual growth; Eastern England at £340,385, up 4.4% from the previous year; and the South East at £383,605, up 4.4% from the previous year. In turn, second-time buyers who will be liable to pay stamp duty will rise in London from 89% to 97%, Eastern England from 73% to 95%, and the South East from 75% to 95%.
For first-time buyers specifically, the stamp duty liability will increase in London from 49% to 79%, Eastern England from 16% to 50%, and the South East from 16% to 51%. About 42% of first-time buyers will therefore be subject to the pay stamp duty starting in April, with a property worth £350,000 costing an additional £2,500 from stamp duty.
Toby Leek, president of Propertymark, argues that ‘the increase in stamp duty charges from April is clearly going to impact buyers in some parts of the country more than others. London and the South East are the two most expensive regions in England to buy a house, and April’s changes will make it harder for first-time buyers to step onto the housing ladder compared to those living in the North of England.’
Even in Northern England, moreover, stamp duty liability will sharply increase for second-time buyers: the North West will rise from 16% to 83%, while the North East will rise from 7% to 40%. It should be noted that first-time buyers will be significantly less impacted in those regions, with customers liable to pay stamp duty rising from 1% to 5% in the North West and from 0% to 2% in the North East.
How Does Stamp Duty Affect Customers After April?
Driving the surge in market activity is the anxiety that the lowered stamp duty thresholds will constrain market activity due to rising expenditure. Whether the property is located in the north or south of the country, or whether you are a first-time or second-time buyer, stamp duty will undoubtedly play a much more prominent role in assessing property desirability.
Most people will be affected by these lowered stamp duty thresholds. Some will have to pay even more money in stamp duty costs. Others will be subject to stamp duty when they previously wouldn’t have under the pre-April stamp duty thresholds. But what is tying these threads is the general expectation that customers will need to be mindful of the additional costs for purchasing property starting in April.
