First-time buyers are rushing to purchase homes before the stamp duty they need to pay rises.
The threshold at which first-time buyers start paying stamp duty will fall from £425,000 to £300,000 from 1 April this year.
For first-time buyers, this could mean that instead of paying no stamp duty on a purchase worth £425,000, they will soon pay £6,205.
A first-time buyer buying a home worth £625,000 currently pays £10,000 in stamp duty. But from 1 April, that will rise to £21,250 – an increase of £11,250.
While the change also affects home movers, first-time buyers being pulled into the stamp duty net due to the rule change will pay more, as the threshold is higher.
The home mover threshold is falling from from £250,000 to £125,000, meaning the maximum extra charge for those missing the deadline is £2,500.
The share of homes bought by first-time buyers across the UK increased to 31.8 per cent in November and December 2024, the highest figure on record, according to the estate agent, Hamptons.
Final rush: Stamp duty is changing on 1 April, and this could cost a first-time buyer up to £11,250 in additional stamp duty
The changes will return stamp duty thresholds to the level they were at before September 2022, when a temporary alteration was made by the Conservative government.
Aneisha Beveridge, head of research at Hamptons, says: ‘First-time buyers are making a dash for the finish line before stamp duty bills increase in April.
‘We’ve seen a particular uptick in purchases over £425,000, where new buyers face the biggest tax bill hikes.
‘Movers, on the other hand, are in less of a hurry and have generally been more successful in negotiating bigger discounts to mitigate against a tax bill increase of up to £2,500.
‘With completion times averaging around four months, many of those agreeing sales now find themselves cutting it fine.’
Race against time for first-time buyers
The window for guaranteeing completion before stamp duty changes is rapidly closing, with less than 11 weeks remaining until the 1 April deadline.
The average time for conveyancing is 12-16 weeks, followed by an additional one to 28 days for exchange and completion, according to Zoopla.
Historically, only 29 per cent of sales agreed complete within three months, according to analysis by Hamptons, with that figure falling to 13 per cent within two months. Only 6 per cent complete within a month.
Cash buyers purchasing a house who aren’t in a complicated chain are most likely to meet the deadline. Meanwhile, flat buyers could see their sales take up to a month longer due to the more complicated process of transferring a leasehold.
Just 4 per cent of mortgaged purchases complete within a month, compared to 13 per cent of sales funded with cash.
However, first-time buyers are more likely to complete in time than movers in a similar property, predominantly because they tend to be at the end of a chain.
Can I buy a leasehold property in time?
There are close to 5 million leasehold homes in the UK, according to Government estimates – many of these will be flats.
Due to the extra paperwork needed for leasehold properties, just 4 per cent of flats complete within a month, according to Hamptons, compared to 6 per cent of all homes.
Leases vary greatly in their length and complexity depending on when they were drawn up.
Advice surrounding the contents of a lease can be complicated and can bring with it additional work such as variations and extensions in some cases.
‘Many leases need changing in order to suit the new buyer or mortgage lender and this process can take many weeks, and often months,’ says Chris Barry, director at solicitors Thomas Legal.
‘Leases in buildings over five stories or 11 meters fall under the building safety act, and this process has proven very slow since its inception in February 2022 due to the amount of confirmation and information required by third parties such as landlords and management companies.
‘Management packs are required, and in larger buildings, there may be one or two head leases which require multiple management packs from different companies to ensure all information regarding the running of the building is captured.
‘Some companies are inherently slow at producing this information and responding to enquiries, adding further delays.’
No time to lose: Aneisha Beveridge, head of research at Hamptons says the next few weeks will be crucial for those hoping to avoid higher stamp duty bills
What about freehold property?
Buying a freehold property, which most houses are, has a better chance of getting through in time, according to Barry.
He adds: ‘When purchasing a freehold property, there is typically one legal title and whilst this can contain restrictions and covenants which needs investigating, there are usually limited third party involvement reducing the need to rely on others, giving the buyers lawyer more control over timescales.
‘Given this additional work when buying a leasehold property, we feel it is fair to say that it might well now be too late to buy a leasehold property before the 1 April deadline, where buying a freehold property may still be realistic.’
How long does it take to get a mortgage?
A typical timescale from application to mortgage offer is between three and four weeks, according to Chris Sykes, technical director at mortgage broker, Private Finance.
‘The simpler the case, the faster the process,’ says Sykes.
‘On rare occasions, if a mortgage valuation on the property is done digitally and income is certified digitally, we’ve seen instant offers or offers within a matter of days.
‘A more complex case with a specialist lender or regional building society may take four to six weeks so specialist cases may not give solicitors time to get the transaction completed quickly.’
Busy: Chris Sykes of mortgage broker, Private Finance says his business has seen an uptick in activity due to this deadline
How long does the legal process take?
For most people trying to beat the stamp duty deadline, the mortgage is less likely to cause problems than the conveyancing.
Conveyancing is the legal side of moving home.
When someone buys or sells a property, they’ll need a conveyancer or solicitor to complete the conveyancing process, so that legal ownership can be transferred from one person to another.
The conveyancing process varies from case to case, but from drafting contracts to completing Local Authority Searches and surveys, it can often end up being the lengthiest part of the moving journey.
On average, conveyancing takes between 12-16 weeks, according to My Home Move Conveyancing.
This timeframe can vary significantly based on various factors, including how many problems are revealed during the survey process, to how responsive a buyer or seller is when it comes to providing and signing vital documents along the way.
Alistair Singer, director of My Home Move Conveyancing says: ‘Conveyancing is an essential part of buying and selling a home. It can also be quite a complicated and, at times, stressful process.
‘Most conveyancing obstacles and delays can be avoided if everyone is on the ball and on the same page. But should a major issue present itself, don’t fret.
‘Listen to the advice of your professional experts and do a little bit of personal research so that you’re aware of how best to overcome the challenges that come your way.’
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