Prospective homebuyers have only 18 months to avoid a stamp duty hike costing them thousands of pounds, analysis from Coventry Building Society has revealed.
The building society explained that a hike in stamp duty may occur as tax on an average priced home in England is set to jump by £2,500 in March 2025.
Homebuyers currently pay stamp duty if their home costs more than £250,000.
However, the building society’s analysis warned that in March 2025 this will drop to £125,000 - taking the tax bill on an average priced home in England from £2,822 to £5,322.
Coventry Building Society head of intermediary relationships, Jonathan Stinton, warned that buyers should know the reduction in thresholds “isn’t forever”.
He explained that, in 18 months' time, people buying a home over £250,000 will “suddenly” have to pay an extra £2,500 in tax.
“That means buyers would need to start saving an extra £140 per month now just to cover the tax hike on their home,” he added.
Additionally, first time buyers currently pay stamp duty if their home costs more than £425,000 which is set to drop to £300,000 in March 2025.
In August homebuyers collectively paid £1.1bn in stamp duty, which was the highest monthly figure so far this year, making the year-to-date total £7.6bn, according to Coventry’s analysis.
Moor Mortgages director and lead adviser, Peter Stamford, stated: “The impending stamp duty hike adds yet another financial burden to the already costly process of moving house.
“With solicitor fees, survey costs, and other expenses, homebuyers are stretched thin.”
He added that an extra £2,500 in tax is “significant” and “could deter potential buyers” and that it’s “high time” for a long-term, fairer approach to stamp duty.
Commenting on the lack of awareness around this issue, Self Employed Mortgage Hub founder, Graham Cox, stated: “The change to stamp duty in 2025 has gone largely unreported.
“As awareness grows next year, it’s likely to lead to a surge in buyers, artificially increasing demand and raising prices, when lower prices are what’s really needed.”
Looking to the future, Stinton stated: “In an ideal world, the Chancellor is busy cooking up some long-term plans for stamp duty which will stop the tax bill on an average priced home virtually doubling overnight.
“Homebuyers didn’t get a mention in the Spring budget, so let’s hope there’s something a lot more positive for them in the Autumn statement.”
However, The Mortgage Expert mortgage expert, Darryl Dhoffer, stated: “Another stamp duty deadline which most likely will be canned before then.”
He explained that, with an election on the horizon, he expected to see government parties placing big emphasis on housing, mortgage schemes and stamp duty thresholds to be revamped and applied in their mandates.
Yellow Brick Mortgages managing director, Stephen Perkins, shared a similar sentiment stating that he was “highly confident” that thresholds will be kept as they are.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
