Looming changes to stamp duty are expected to fuel a surge in first-time buyer activity, British bank Halifax has revealed. With the average UK house price nearing £300,000, this shift could be a pivotal moment for prospective homeowners looking to climb onto the property ladder.
What’s Changing with Stamp Duty?
Currently, first-time buyers enjoy significant benefits under the temporary stamp duty threshold, paying no tax on properties up to £425,000. However, from April 2025, this threshold will drop to £300,000, with a reduced higher limit of £500,000. Homes exceeding these amounts will be subject to standard stamp duty rates.
This shift, announced in Labour’s October Budget by Rachel Reeves, means buyers will face increased costs, potentially motivating many to accelerate their purchasing plans before the changes take effect.
The Rising Cost of Housing
The UK housing market continues to experience steady growth. Halifax reports the average house price at £297,166, slightly higher than rival lender Nationwide’s figure of £269,426. Both lenders base their calculations on internal mortgage data, excluding cash transactions, which account for a third of all property purchases.
First-Time Buyers Motivated to Act
Despite the looming changes, Halifax’s head of mortgages, Amanda Bryden, noted that first-time buyers remain motivated. “The coming changes to stamp duty have given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward,” she said.
Dropping mortgage rates and rising wages towards the end of 2024 have also boosted buyer confidence, with demand returning to pre-pandemic levels. However, Bryden acknowledged that affordability remains a challenge for many, particularly with lingering high interest rates and inflationary pressures.
Find Out How Much Can You Borrow as a First Time Buyer?
If you’re considering buying a home, understanding your borrowing capacity is crucial. Use our How Much Can I Borrow Calculator to estimate your mortgage affordability quickly and easily. It’s a helpful tool to plan your finances and make informed decisions in this competitive market.
Looking Ahead
Economists predict a gradual decline in interest rates throughout 2025, which could bring relief to borrowers with more affordable mortgage rates. However, the Bank of England remains cautious, with Governor Andrew Bailey emphasising the uncertainty in economic conditions.
“I think the path is downward, but I really would caution that at this stage, with the amount of uncertainty, we can’t tell you by how much or when particular moves are going to take place,” Bailey said in a recent statement.
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