The majority of home buyers in England and Northern Ireland will face higher stamp duty costs from April, as the (SDLT) relief introduced in the 2022 mini-budget ends. According to new analysis from Zoopla, one of the UK’s leading property websites, the changes will result in an additional £1.1 billion in annual revenue for the government.
With the return of the 2% stamp duty band for properties priced between £125,000 and £250,000, the proportion of existing homeowners liable to pay will surge from 49% to 83%, adding up to £2,500 per purchase. Only 17% of homeowners will remain exempt.
The West Midlands will see the sharpest rise, with 66% more home buyers expected to pay stamp duty. First-time buyers will also be impacted, as the proportion of those required to pay will double to 42%, with London and the South East hit hardest. However, 58% of first-time buyers will still be exempt, particularly in northern regions where property prices are lower.
Overall, these changes will significantly increase the cost of buying a home for most buyers, particularly in higher-priced areas.
Majority of homeowners to pay more
From the 1st April of 2025, four in every five (83 per cent) homeowners will pay stamp duty on buying a main residence, up from 49 per cent today, as the two per cent rate between £125,000 and £250,000 returns. Less than a fifth of homeowners (17 per cent) will pay no stamp duty on purchases below £125,000.
This means that the 49 per cent of homeowner purchases over £250,000 will pay an extra £2,500 in stamp duty from April. The 33 per cent of buyers purchasing between £125,000 and £250,000 will pay two per cent on the purchase price up to a maximum of £2,500.
The biggest jump in buyers paying stamp duty will be in the West Midlands where 66 per cent more sales will pay from April, followed by 55 per cent in the East Midlands and 50 per cent in the North West.
The proportion of first-time buyers paying Stamp Duty doubles
First-time buyers will pay stamp duty on purchases over £300,000 from April, meaning three in five (58 per cent) will avoid this extra cost of buying. This helps those buying in areas with lower house prices. The number of first-time buyers liable to pay stamp duty will be the lowest in the North East (two per cent), Yorkshire and the Humber (three per cent), Northern Ireland (five per cent) and the North West (five per cent).
However, the proportion of first-time buyers liable to pay stamp duty will double to 42 per cent from April, hitting London and South East buyers in the £300,000 and £625,000 range the hardest, with costs of up to £15,000 per purchase. Buying at £350,000 will cost £2,500 per purchase, up from £0 today. Buying a £500,000 home will cost £10,000 in stamp duty, up from £3,750 today and buying at £550,000 will jump from £6,250 to £15,000.
Richard Donnell, Executive Director at Zoopla comments: “Stamp duty has become a big source of tax revenue, approaching £10bn a year for the government. The reduction in tax reliefs from April will see more home buyers paying stamp duty.
“Existing homeowners will pay up to £2,500 more for each purchase across a large number of sales. The average seller has made £60,000 in capital gains so there is flexibility to absorb this cost but buyers will expect to factor this extra cost into what they offer.
“It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the most where buying costs are already high. This will reduce buying power and market activity at a local level.
“Stamp duty is a big tax on home movers in southern England where affordability problems are already a major challenge. The case for reforming stamp duty remains but the question is where to replace the multi-billion in annual tax revenues.”