Property buyers warned over 'risky' stamp duty rush - as window to make huge saving narrows
by Rory Poulter · ChronicleLiveHome buyers are rushing to complete property purchases ahead of a stamp duty increase scheduled for April 1. This follows Chancellor Rachel Reeves' decision not to extend the stamp duty holiday initiated by the previous Conservative government.
The change will add thousands of pounds to the cost of completing a purchase, hitting first-time buyers particularly hard. Property sales agreed over the past four weeks have risen by 19 percent compared to the same period in 2023, with buyer demand up by 25 percent, according to property portal Zoopla.
This surge is expected to continue into the early weeks of the new year. The urgency to buy now is so great that some property experts believe buyers will risk paying more than necessary just to secure and complete a purchase before the stamp duty increase.
The changes mean: The net effect of these changes means that, for example, a first-time buyer purchasing a property at £425,000 who currently pays no stamp duty will be charged £6,250 from April 1, 2025. In parts of the country where average house prices are higher, there's a surge in young people trying to get on the property ladder.
First-time buyers in London, looking to purchase an average priced house at £531,212, are set to be worst affected, having to find an additional £11,250 when the changes take effect, reports the Manchester Evening News.
Matt Thompson, head of sales at Chestertons, noted: "We are seeing more buyers entering the market which is not typical for this time of year... one reason for this is the change to stamp duty. This is driving first-time buyers to get on the property ladder before that deadline."
Nevertheless, experts caution that rushing into a purchase under suboptimal conditions can be costly. From April, a first-time buyer of a £500,000 home will face an additional £6,250 in stamp duty.
However, overpaying by just 2% to beat the deadline would result in an extra £10,000 expenditure. Jessica Sully of Carringtons estate agents in Kingston advised: "The message to first-time buyers is don't put yourself under too much pressure to secure a property before the stamp duty changes at the end of March 2025."
"With lower stock levels and rising demand, sellers have the upper hand. Typically, we see more properties come to market at the start of January and with an increase in stock there will be more choice and control. Be wary of bidding wars and paying over the odds for a property in a panic as this will negate any savings."
Charlie Lamdin, head of the Best Agent network, observed: "There's always a rush to beat a stamp duty increase deadline. Unsurprisingly, people are happier pouring money into property than giving it to HMRC, especially as they can borrow money for the property, but not for stamp duty."
This makes sense to a certain extent, but when buyers become overly fixated on it, it can and does result in buyers overpaying for a home.
"He continued: "In the flurry of a bidding war on a property, people can get carried away, not only because they want to win the bidding to beat the deadline, but also because they want to avoid going back to square one and having to start all over again looking for another home. It is very time-consuming.
"First-time buyers with large loan-to-value mortgages need to be extremely careful, as they are the ones most likely to end up overpaying in this scenario. House prices don't always go up, and you can very quickly find yourself in negative equity, stuck with a home you can't sell when you need to move."
David Hollingworth, from broker L&C Mortgages, added: "It's important that buyers remain clear-eyed about making the right offer on the right property. That means remaining focused on finding a property that will suit your requirements and is at the right price."
"Keep things in perspective. There may be a lull after the [stamp duty] deadline passes as buyers bring their plans forward, which could allow for more negotiation in the aftermath. No one wants to pay more stamp duty than they have to."
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