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From March, more than nine in 10 homes for sale will be subject to stamp duty.

Posted on by L. Dreeye
From March, more than nine in 10 homes for sale will be subject to stamp duty.

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 will start paying tax on property purchases will return to pre-temporary levels in 2022, meaning more homebuyers will be brought into the net.

The price at which stamp duty will begin to apply will return to £300,000 for first-time buyers, from the current level of £425,000.

For all other buyers the amount will be reduced to £125,000 from the current level of £250,000.

From March, more than nine in 10 homes for sale will be subject to stamp duty.

The Chancellor is widely expected to decide not to continue raising the threshold at which people start paying stamp duty.

This will result in buyers having to pay stamp duty on 93 per cent of properties on the English market, according to Leeds Building Society.

Currently, buyers will only pay stamp duty on 70 per cent of homes on the market.

When the threshold rises again, the amount owed on a typical home could rise from £2,169 to £4,669, based on the average price of £293,299 in the latest Halifax House Price Index.

In cheaper areas of the country, many more home buyers will have to pay the tax, even though they currently don’t. In Yorkshire, buyers currently pay stamp duty on 49 per cent of homes for sale.

However, once the expected changes take effect, that number will increase to 86 percent of homes in the county.

First time buyers will lose out

There have been calls for Chancellor Rachel Reeves to keep the current thresholds in place permanently, in line with Labour’s pledge to get more properties into the hands of first-time buyers.

However, the policy is not expected to be included in tomorrow’s budget.

The housing market has changed dramatically over the past decades. Leeds BS data shows house prices paid by first-time buyers in 2022 were 16 times higher than in 1982, while gross income was just seven times higher.

From the end of 2022, first-time buyers purchasing a property worth up to £425,000 will not pay stamp duty. If their home is more expensive, they only pay tax on the portion over £425,000.

However, if this limit reverts to the old £300,000 threshold from 31 March 2025, this means the same £425,000 purchase would be subject to tax of £6,205.

Currently, stamp duty is levied at 5 per cent on the portion of the purchase price between £250,001 and £925,000, 10 per cent on the portion between £925,001 and £1.5 million and 12 per cent on the amount above that.

Leeds BS research shows that with stamp duty changes forecast in tomorrow's Budget, buyers will be required to pay stamp duty on 93% of homes on the market.

Leeds BS research shows that with stamp duty changes forecast in tomorrow’s Budget, buyers will be required to pay stamp duty on 93% of homes on the market.

According to Leeds BS, the extra stamp duty means first-time buyers may take longer to save enough money to get on the housing ladder.

It says that from March 31, the average first-time buyer of a private rented property in London will have to save up to 12 more months to afford their own property.

Andrew Greenwood, deputy chief executive of Leeds BS, said: “We all know the value that having a place to call home can add to our lives.

“As a mutual organisation, we were created to help people own their 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 housebuilding, but our country needs to develop a long-term and collaborative plan to improve the stability of the housing market if we are to solve this problem.

“This must be a plan aimed at delivering more homes, supporting first-time buyers to save on their deposit and expanding the routes available to home ownership.”

How to find a new mortgage

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

What should I do if I need to remortgage?

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

Homeowners can secure a new deal six to nine months in advance, often without any commitment to closing.

Most mortgage deals allow you to add a fee to your loan and charge it only when you take it out. This means borrowers can secure a rate without paying expensive arrangement fees.

Keep in mind that if you do this and don’t pay the closing fee, interest will be paid on the fee amount for the life of the loan, so this may not be the best option for everyone.

What should I do if I buy a house?

Those who have negotiated a home purchase should also aim to secure a rate as soon as possible so they know exactly what their monthly payments will be.

Buyers should avoid being overextended and remember that home prices could fall as higher mortgage rates limit people’s borrowing and purchasing power.

How to compare mortgage costs

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

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

Want to see today’s best mortgage rates? Use This is Money and L&C’s best mortgage rate calculator to show you offers that match your home’s 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 search. It will search thousands of offers from over 90 different lenders to find you the best deal.

> Find the best mortgage deal with This is Money and L&C

However, be aware 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 mortgage that’s right for you.

Mortgage services are provided by London & Country Mortgages (L&C), which is authorized and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property could be repossessed if you fail to make timely mortgage payments.

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