More than nine in 10 homes for sale in England will be subject to stamp duty from March 2025, according to new analysis.
The thresholds at which people start paying property taxes will return to where they were before the temporary changes in 2022, meaning more homebuyers will get involved online.
The price at which stamp duty is charged will return to £300,000 for first-time buyers, from the current level of £425,000.
For all other buyers it will be reduced from the current level of £250,000 to £125,000.
It is widely expected that the chancellor will decide not to continue with the increase in the thresholds at which people start paying stamp duty
According to the Leeds Building Society, this will result in buyers having to pay stamp duty on 93 percent of properties on the market in England.
Currently, buyers only pay stamp duty on 70 percent of homes on the market.
When the threshold rises again, the amount owed for a typical house could go from £2,169 to £4,669, based on the average price of £293,299 in Halifax’s latest house price index.
In cheaper parts of the country, many more home buyers will have to pay the tax, while they currently do not. In Yorkshire, buyers are currently paying stamp duty on 49 per cent of homes currently on the market.
However, once the expected changes come into effect, this will increase to 86 percent of homes in the province.
First-time buyers run the risk
There have been calls for Chancellor Rachel Reeves to maintain the current thresholds permanently, in line with Labour’s pledge to get more properties into the hands of first-time buyers.
However, it is not thought the policy will be included in tomorrow’s budget.
The housing market has changed dramatically in recent decades. Leeds BS data shows that house prices paid by first-time buyers in 2022 were 16 times higher than in 1982, while gross income was only seven times higher.
Since the end of 2022, a first-time buyer purchasing a property worth £425,000 will pay no stamp duty. If their house is more expensive, they will only pay tax on the portion above £425,000.
However, if this limit reverts to the old £300,000 threshold from 31 March 2025, it will mean the same £425,000 purchase will be subject to a tax bill of £6,205.
Currently, stamp duty is charged at 5 percent on the portion of the purchase price from £250,001 to £925,000, 10 percent on the portion from £925,001 to £1.5 million, and 12 percent on anything above.
Research from Leeds BS shows that with the stamp duty changes predicted in tomorrow’s Budget, buyers will be required to pay stamp duty on 93% of homes on the market
The extra stamp duty means it could take longer for first-time buyers to save enough to get into the housing market, according to Leeds BS.
It says that from March 31, the average first-time homebuyer renting privately in London will have to save for another twelve months to afford their own home.
Andrew Greenwood, deputy chief executive of Leeds BS, said: “We all know the value having a place to call home can add to our lives.
‘As a mutual fund, we were founded to help people own their own home and save for their future, creating a sense of belonging in communities across the country.
‘We welcome the Labor Government’s commitment to social and affordable housing and the renewed interest in housing, but our country must develop a joint long-term plan to improve housing market stability if we are to solve the problem.
“This should be a plan that focuses on delivering more homes, supporting first-time buyers to save for their deposit and expanding affordable routes to home ownership.”
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