The end of the FTBs’ stamp duty holiday has been confirmed as April 1 next year
Housing transactions in the first quarter of next year will surge, analysts predict.
The end of the FTBs’ stamp duty holiday has been confirmed as April 1 next year. This holiday was ushered in by the (2022) mini-Budget, and means there is no stamp duty for FTBs on the first £425,000 of a property’s value – up from £300,000.
This applies to all homes worth up to £625,000 – up from £500,000 previously. For existing owners, the threshold was doubled from £125,000 to £250,000.
Sarah Coles, personal finance analyst at business consultancy Hargreaves Lansdown, says: The end of the holiday is likely to mean a rush of purchases early next year, to get in ahead of the change, so we could see prices increase at that point as buyers bring forward their plans. Once the higher rate kicks in, we could well see some of that unwind.
That view is shared by Nationwide chief economist Robert Gardner: The main impact of the stamp duty changes is likely to be on the timing of property transactions, as buyers aim to ensure their house purchases complete before the tax change takes effect.
This will lead to a jump in transactions in the first three months of 2025, particularly in March, and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. However, the swings in activity are likely to be somewhat less pronounced, in this instance, given that the stamp duty cut has been in place for some time and its planned expiry was well known.
Gardner says: Affordability is also still relatively stretched at present as a result of the higher interest rate environment, which is acting to dampen housing market activity more generally. Nonetheless, determining the underlying strength of the market will become more challenging until this period of volatility passes.
Nationwide says changes to stamp duty thresholds will impact around one in five FTBs “though the impact will vary significantly across the country, largely as a result of the difference in house prices across the UK”.
It says that the South East is likely to be the hardest hit, as 40% of FTBs currently pay between £300,000 and £425,000 for their homes. The change will cost these buyers an extra £2,900 on average.