Home Money Zoopla warns that first-time buyers have two months left to save up to £15,000 in stamp duty

Zoopla warns that first-time buyers have two months left to save up to £15,000 in stamp duty

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Tax impact: Currently, a first-time buyer does not pay stamp duty on properties up to £425,000, but this amount will be reduced to £300,000 from April 2025
  • More first-time buyers to pay SDLT as zero-rate threshold drops to £300,000
  • The return to old thresholds will hit first-time buyers in the South the hardest

First-time buyers in England are being warned they only have about two months to find a property or their stamp duty bill could skyrocket.

Thousands of first-time buyers benefited when stamp duty rates were temporarily reduced during the 2022 mini budget.

But SDLT rates will revert to their previous thresholds from 1 April 2025, assuming no further changes are announced in the autumn budget.

A first-time buyer purchasing a property up to a value of £425,000 currently pays no stamp duty.

Tax impact: Currently, a first-time buyer does not pay stamp duty on properties up to £425,000, but this amount will be reduced to £300,000 from April 2025

However, from April 1, the same purchase will be subject to a £6,205 tax bill when stamp duty rates return to previous levels.

Zoopla says first-time buyers have around two months to find a home and get their offer accepted before it is likely to be too late to avoid the SDLT changes.

This is because the average property sale takes 25 weeks from listing to completion, according to the real estate portal.

How will stamp duty be modified?

Currently, a first-time buyer pays no stamp duty when purchasing a home worth up to £425,000.

If their home is more expensive, they pay tax on the part exceeding £425,000.

However, this limit will revert to the old £300,000 threshold from April 2025.

First-time buyers purchasing homes priced between £500,000 and £625,000 will also lose their eligibility for first-time buyer relief.

The changes mean a third of first-time buyers in England will pay more stamp duty from April next year than they do now, according to Zoopla.

Who will be most affected?

Zoopla suggests some first-time buyers could save up to £15,000 in stamp duty if they buy a home before April 1.

In reality, only a minority of first-time homebuyers will ever come close to achieving that kind of savings.

According to Zoopla analysis, stamp duty is most often paid by those moving to the south of England, which accounts for 81 per cent of total SDLT revenue.

From 1 April, the average first-time buyer in London will face a stamp duty bill of £5,600.

Those living in the south-east will face an average bill of £1,390 and those living in the east of England will pay an average of £1,040, compared with nothing today.

However, in some areas of London, first-time buyers will pay an extra £15,000 in stamp duty, as things stand now and with no change announced in the Budget.

For example, the London boroughs of Camden, Hammersmith and Fulham, and Islington, where property prices average over £500,000, will see SDLT rise by an average of £15,000.

The worst-affected local authorities in the south of England: more than four in five of all total SDLT revenues come from the south of England, according to Zoopla

The worst-affected local authorities in the south of England: more than four in five of all total SDLT revenues come from the south of England, according to Zoopla

Due to lower property prices, the vast majority of buyers in the North of England and the East and West Midlands will not be affected by the changes next April.

Zoopla says around 95 per cent of first-time buyers in these regions are currently looking for homes priced below £300,000 and will therefore be unaffected.

Izabella Lubowiecka, senior property researcher at Zoopla, said: ‘Thousands of first-time buyers have benefited from the stamp duty relief introduced in 2022.

‘With just two months to go until the deadline, those looking to buy their first home should act this autumn if they want to avoid paying more in stamp duty, particularly if they are looking to buy a home in the south of England, an area where first-time buyers are likely to see a considerable rise in SDLT once the changes come into effect next April.

‘Those who are not planning to buy until after April 1 should make sure they factor the additional stamp duty into their plans and factor it into their overall budgets.’

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate contract is ending or are purchasing a home should explore their options as soon as possible.

What if I need to refinance my mortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to act.

Landlords can close a new deal six to nine months in advance, often with no obligation to accept it.

Most mortgage agreements allow fees to be added to the loan and only charged at the time of contracting. This means borrowers can lock in a rate without paying costly origination fees.

Please note that by doing this and not paying off the fee at the end, interest will be paid on the fee amount for the entire term of the loan, so this may not be the best option for everyone.

What if I’m buying a house?

Those with home purchases lined up should also try to get rates as soon as possible, so they know exactly what their monthly payments will be.

Buyers should avoid over-stretching themselves and be aware that home prices can fall as higher mortgage rates limit people’s borrowing capacity and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C, to provide you with expert, free mortgage advice.

Are you interested in seeing today’s best mortgage rates? Use This is the best mortgage rate calculator from Money and L&C to display offers that match your home value, mortgage size, term, and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s Online Mortgage Finder? This will search through thousands of offers from over 90 different lenders to discover the best option for you.

> Find your best mortgage offer with This is Money and L&C

Please note that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

The mortgage service is provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property may be repossessed if you do not keep up with your mortgage payments.

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