Homebuyers paid £13billion in stamp duty last year, according to Coventry Building Society’s analysis of HMRC figures.
It represented a 10 per cent rise on the £11.8billion homebuyers paid in 2023.
The increase could be attributed to more people buying homes, an increase to the stamp duty surcharge paid on second properties, and buyers trying to complete purchases before rates increase in April.
The Office for Budget Responsibility has forecast that homebuyers are set to pay £18.1billion by 2030, representing a near 40 per cent rise in receipts compared to 2024.
From 1 April this year, anyone buying a home will start paying more stamp duty.
Homebuyers currently pay stamp duty if their home costs more than £250,000. From 1 April this will drop back to £125,000, the level it was at before temporary changes were made in 2022.
The maximum extra charge for home movers missing the deadline is £2,500.
Tax take: Homebuyers paid a total of £13.03bn in stamp duty last year, according to Coventry Building Society’s analysis of HMRC figures
First-time buyers currently pay stamp duty if their home costs more than £425,000, which is set to drop to £300,000.
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.
Buy-to-let investors and second home buyers already faced a 3 per cent surcharge above and beyond what those purchasing a property to live in currently pay.
However, since 30 October last year that went up to 5 per cent, adding thousands of pounds to the cost of buy-to-let and second home purchases.
Under previous rules, a £300,000 property with the surcharge included would cost £11,500 in stamp duty.
That has now risen to £17,500, and from 1 April this year when the standard stamp duty rates change, that will rise to £20,000.
| Band | Stamp duty land tax rate | Additional rate for landlords / second homes |
|---|---|---|
| First-time buyers pay 0% to £300,000 then normal rates apply | ||
| £0 – £125k | 0% | 5% |
| £125,001 – £250k | 2% | 7% |
| £250,001 – £925k | 5% | 10% |
| £925,001 – £1.5m | 10% | 15% |
| £1.5m + | 12% | 17% |
| * No stamp duty is paid on property transactions costing less than £40,000 as these are considered low value and not reported to HMRC | ||
Non-UK buyers based overseas pay an extra 2 per cent on top of that, so a 7 per cent surcharge overall.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society said: ‘Homebuyers are paying more and more to the taxman and it’s only going to get worse from April when the thresholds change, and stamp duty bills are hiked again.
‘The tax bill for moving home, or even buying a first home in some parts of the country, is likely to shoot up by thousands of pounds.
‘The extra revenue may help the Treasury, but people will be put off buying homes if the tax burden becomes too costly.’
Will higher stamp duty affect house prices?
The government isn’t disguising its desire for a higher tax take.
While the chancellor Rachel Reeves sees income tax increases as out of the question due to Labour’s pre-election pledges, stamp duty is clearly something she is prepared to target.
The additional 2 per cent stamp duty surcharge on second home purchases, announced in October’s Budget, was clear evidence of this – and similar moves could follow.
Prior to the election, Reeves said Labour intends to target overseas buyers by increasing the stamp duty they pay when they purchase UK property.
But while extra stamp duty surcharges on overseas buyers, second homeowners and property investors tends to be met with little public rebuke, raising stamp duty for home movers and first-time buyers is more controversial.
People face considerable transaction costs when moving home, with estate agent and solicitor fees in particular mounting up – but stamp duty is often the greatest cost to consider.
Stamp duty acts as a deterrent to both people moving and getting on the property ladder, according to Jeremy Leaf, north London estate agent and a former Rics residential chairman.
He says stamp duty ‘represents an increasing deterrent for many home buyers, particularly those in lower price ranges’.
Leaf adds: ‘Their involvement is vital to maintaining activity throughout the market now that the concession is being withdrawn from April.
‘At the very least stamp duty rates should keep pace with house price inflation so that it doesn’t become an even heavier burden and reduce market activity further.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, says buyers are increasingly put off by stamp duty costs
‘Apart from its huge impact on first-time buyers, who are the engine room of the market as they tend to trade up regularly, it is investors, saddled with the extra recent penalty, who have been put off buying.
‘The reluctance to buy investment property is reducing stock and keeping rents artificially high, making deposit saving even harder.’
Arjan Verbeek, founder and chief executive of mortgage lender Perenna says raising stamp duty on first-time buyers is at odds with Labour’s vision of getting more people on to the property ladder.
He says: ‘Higher stamp duty will do nothing but add more friction to the housing market, and hammer first-time buyers at a time when we are already in the midst of an affordability crisis.
‘After a frenzied rush for the April finish line, it has the potential to lock up property chains, dragging on the market.
‘Alongside first time buyers, this change will disincentivise those with larger properties from downsizing after children have left the family home.
‘This risks putting a critical segment of the market on ice, meaning young families can’t access a suitably-sized home.
‘This ultimately has a domino effect all the way down to the bottom of the market, where first time buyers are once again disproportionately affected.’
Arjan Verbeek, founder and chief executive of mortgage lender Perenna, says that increasing stamp duty will prevent people from downsizing
Should the Government cut stamp duty?
The Government might do better to charge stamp duty to people selling rather than those buying, according to Jeremy Leaf.
‘Increasing transactions should be the driving force for the Government, not least because of their impact on so much of the rest of the economy in terms of associated businesses such as builders, equipment suppliers, lenders, trades people etc,’ said Leaf.
‘Rachel Reeves should consider looking at spreading the cost further through the market and consider whether applying the duty to sellers rather than buyers.
‘Sellers perhaps enjoy greater ability to pay from accumulated equity, [so it] would have less of a negative impact overall.’
Verbeek thinks stamp duty should not be a ‘one-size-fits-all approach’ and that certain buyers should be exempt from paying the tax.
‘All regulation should be introduced with nuance and due care for the full extent of its consequences,’ he says.
‘The one-size-fits-all approach has been tried, tested, and ultimately failed.
‘If the Chancellor wants to deliver growth for the economy, she should consider exempting pockets of the market from the stamp duty changes to encourage “right-sizing” and making sure homes on the market are being sold to those who need them most.’
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