From 1st April 2025, Stamp Duty rates are set to change as the temporary threshold increases come to an end. While these changes will impact all homebuyers, first-time buyers are expected to feel the effects the most. If you're planning to buy your first home, here's what you need to know.
What is Stamp Duty?
Stamp duty is a tax that you need to pay when you purchase a property over a certain threshold. The amount of stamp duty you pay is based on the purchase price of the property, not the mortgage amount.
Currently, first-time buyers benefit from a tax-free allowance on properties up to £425,000. They can also access reduced rates of 5% on properties priced between £425,001 and £625,000.
For all other buyers, the current Stamp Duty rates are:
- 0% on the first £250,000
- 5% on the portion of the property price between £250,001-£925,000
- 10% on the portion of the property price between £925,001 and £1.5 million
- 12% on any remaining amount above £1.5 million.
What Are the Upcoming Changes?
From April 2025, house buyers in England and Northern Ireland will start paying stamp duty on properties over £125,000, instead of over £250,000.
For First-time buyers who currently pay no stamp duty on homes up to £425,000, this will be dropping to £300,000.
What Does This Mean for First-Time Buyers?
The lower threshold still offers relief but narrows the range of tax-free properties, particularly in regions with higher average house prices. This might mean that buyers may need to adjust their budgets or prioritise properties below the threshold to minimise tax liability.
Despite these changes, Halifax’s head of mortgages Amanda Bryden says the coming changes to stamp duty has “given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward.”
Daniel Lee, Area Manager at The Venmore Group, shares his thoughts on how these changes may impact first-time buyers:
“While first-time buyers will still be looking to get onto the property ladder despite the upcoming stamp duty changes, the lower threshold could make it more challenging for those with smaller deposits. With higher upfront costs, some buyers may need to adjust their budgets or explore alternative financing options. However, the demand for homeownership remains strong, and with the right guidance, buyers can still navigate the market successfully."
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