December, 2024
As homebuyers, homeowners and the wider market continue to digest the impact of Labour’s first budget since coming to power in July, those looking to move will be in a rush to complete as soon as possible to avoid increased stamp duty costs.
One of the biggest surprise announcements in the budget was the increase in Stamp Duty Land Tax (SDLT) for second-home buyers and buy-to-let purchasers. That increase was immediate, coming into force the day after the budget announcement meaning that thosebuyers had no chance to escape the increased costs.
Other buyers meanwhile also face a hike in their SDLT costs by default since Chancellor Rachel Reeves failed to extend the reduced thresholds currently in place for them. Buyers now have until the end of March to swerve the SDLT increases that are coming their way by buying early.
From April 1, the SDLT property price thresholds – the point at which SDLT becomes payable – halves. The reduction, from £250,000 to £125,000, will impact general buyers of residential properties in England and Northern Ireland. It means they will pay a 2% SDLT fee for properties priced between £125,001 and £250,000 and a 5% fee for those priced between £250,001 and £925,000.
First-time buyers will also be hit with an increase in costs from the beginning of April as their SDLT thresholds reduce from a current £425,000 limit when buying a residential property worth £625,000 or less to £300,000 with the property value that is now reduced to £500,000 or less.
However, the government also announced in the budget that it will make the mortgage guarantee scheme – which helps to support mortgage loan-to-value ratios of 95% for first-time buyers and was due to expire next year – permanent. It will announce further details at its next spending review.
In the meantime, the increase in SDLT will mean that buyers and sellers alike will be hoping to complete on their purchases before the thresholds – and their costs – change.
Rightmove’s latest House Price Index seems to support the theory that sales are busier than usual. Its November figures show that the number of sales agreed is still 26% ahead of the quieter market at the same time last year while the number of new sellers deciding to move and coming to market is up by 6% against the same period a year ago. It says its real-time data also shows early signs of a post-Bank-rate-cut uptick in buyer demand after the base rate was reduced to 4.75% as expected in early November.
The average time to secure a buyer however is the same as it was this time last year – standing static at 62 days. Given that the process to completion obviously takes longer than this it means that buyers will need to move fast if they are to secure properties before they face the SDLT increases. It could mean that the normal winter sales dip may not happen this year although with some mortgage lenders now easing up rates, buyers may face a challenging balancing act of costs, especially since another interest rate drop before the end of the year may now be unlikely.
