Stamp duty on average home could rise to £4,669 as Labor looks to rule out budget changes

  • Stamp duty land tax will return to previous levels in March 2025

Someone buying an average-priced house in England and Northern Ireland could see their stamp duty bill more than double from March next year as Labor will rule out any change to the tax in the Budget.

The amount owed for a typical house can range from £2,169 to £4,669, based on the average price of £293,299 in the latest Halifax House Price Index.

Home movers currently pay stamp duty if their home costs more than £250,000, but this will drop to £125,000 in March 2025 – the level it was before temporary changes were made to the 2022 mini-budget.

Labor was urged to consider freezing tax at current levels, but it is understood the chancellor has decided against this.

Off the table: Rachel Reeves looks set to ignore stamp duty in the upcoming budget

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, this limit, which has been at its current level since 2022, will revert to the old threshold of £300,000 from 31 March 2025.

This means that the same purchase of €425,000 will be subject to a tax bill of €6,205 when stamp duty returns to previous levels.

Tim Bannister, a property expert at Rightmove, said: ‘This will undoubtedly be seen as an unwanted extra cost by many buyers looking to move in 2025 – and potentially by those currently in the process.

‘With the zero rate threshold, the rate at which no stamp duty is charged for house movers, falling from £250,000 to £125,000, anyone buying a property above this amount could face paying £2,500 more in stamps. land tax levy.

‘Meanwhile, the threshold at which first-time buyers don’t pay stamp duty is likely to drop from £425,000 to £300,000.

Property expert: Tim Bannister from Rightmove

‘If a first-time buyer buys a home at the average UK asking price of £370,759, they will pay £3,538 in stamp duty from March 2025, compared to nothing now.’

The average asking price is considerably higher than the average selling price.

Rightmove says that at current thresholds, 58 per cent of properties are exempt from stamp duty for first-time buyers.

If the threshold is lowered, only 37 percent of homes would remain stamp duty free, a reduction of 21 percent.

This will particularly impact buyers in regions with higher property prices, such as London and the South East.

Bannister expects many people will try to push through their purchases to avoid the extra costs.

He added: ‘We are likely to see a rush to complete property transactions before the stamp duty changes come into effect as buyers look to avoid the extra costs which means a busier Christmas and New Year for the housing market.

‘The average time it takes to complete a sale from the time an offer is accepted is currently 152 days.

‘Coincidentally, this is the same number of days between the Budget on October 30, 2024 and the proposed stamp duty deadline on March 31, 2025.

“This means that buyers who agree to a purchase after budget will, on average, not complete on time unless everyone involved in the transaction works together to speed up the process.”

How do you find a new mortgage?

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

What should I do if I need to take out a new mortgage?

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

Homeowners can sign a new deal six to nine months in advance, often with no obligation to enter into it.

Most mortgage agreements allow fees to be added to the loan and will not be charged until closing. This means borrowers can secure a rate without paying expensive arrangement fees.

Please note that if you do this and do not repay the fee on completion, interest will accrue on the fee amount for the entire term of the loan. So this may not be the best option for everyone.

What if I buy a house?

Those who have entered into a home purchase agreement should also aim to secure rates as quickly as possible so they know exactly what their monthly payments will be.

Buyers should avoid overextending and be aware that home prices may fall as higher mortgage rates limit people’s borrowing options and purchasing power.

How to compare mortgage costs?

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

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

Curious about today’s best mortgage interest rates? Usage This is the best mortgage interest calculator from Money and L&C to display deals that suit your home value, mortgage size, term and fixed rate needs.

If you’re ready to find your next mortgage, use L&C’s online Mortgage Finder. It searches thousands of offers from more than 90 different lenders to discover the best deal for you.

> Find your best mortgage deal 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, contact L&C as soon as possible so they can help you find the right mortgage for you.

Mortgage service provided by London & Country Mortgages (L&C), authorized and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most Buy to Let mortgages. If you do not repay your mortgage, your home or real estate may be seized

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