The recent news that the stamp duty threshold will be reduced next April hasn’t deterred many home buyers.
Despite recent news that the stamp duty exemption threshold will be reduced next April, some 95% of homebuyers have said they would be undeterred by the government’s decision not to extend the higher threshold. The exemption threshold was increased from £300,000 to £425,000 in November 2022 to boost the property market and support first-time buyers. While it was hoped that the higher threshold may be extended further, this won’t be the case.
From 1 April 2025, the stamp duty threshold will drop from the current level of £425,000 to £300,000. First-time buyers would pay no stamp duty on the first £425,000 until 31 March 2025.
However, starting in April, they will pay stamp duty above £300,000. This means a first-time buyer purchasing a property could pay approximately £6250 extra in stamp duty if the property is worth £425,000.
However, a recent survey by London estate agents Benham and Reeves revealed that 73% of prospective first-time buyers said they would continue with their plans to buy a property. A further 22% said it would only temporarily affect their plans.
Some 53% said they would aim to complete before the stamp duty threshold reverts back to £300,000, meaning they would need to complete by 31 March.
How to prepare to buy your first home
If you’re thinking of buying your first property, here’s how to get prepared:
• Save as much as possible for a deposit – the more you put aside, the better, as a higher deposit will give you access to more competitive mortgage deals. You’ll typically need a deposit of 5 to 15% of the property’s purchase price.
• Make sure you’re on the electoral register and your details are up to date – not being on the register can affect your credit rating, which could make it harder to get a mortgage
• Try to clear or reduce any debts and ensure credit card bills are paid on time – this will help show you’re a responsible borrower.
• Seek advice from an experienced broker – they can look at your current situation and advise you on steps you need to take to get mortgage-ready, as well as tell you how much you could borrow.
• Think about other costs – make sure you budget for additional home-buying costs such as solicitors’ fees, a survey, a home buyers’ report and sometimes an arrangement fee.
We’re here to help if you need advice.