New analysis from Zoopla has predicted that house price growth will be impacted by up to one per cent due to upcoming changes to stamp duty announced in the recent Budget.
Stamp duty rates in England and Northern Ireland are set to return to previous levels from April 2025. This will result in a two per cent tax on sales between £125,000 and £250,000 for homebuyers, and a reduced rate for first-time buyers. It will mean 83% of homebuyers will pay more stamp duty from next April, a figure that currently stands at 49%.
Buyers in the Midlands and Northern England will be impacted the most, with 67% of sales sitting in the stamp duty price bracket. Additionally, 49% of sales above the £250,000 threshold will have to pay an extra £2,500 per sale. Homes valued at £300,000 will also see costs double, with stamp duty rising to £5,000 from April of next year.
First-time buyer relief will fall from £425,000 to £300,000, which could mean an additional 20% of first-time buyers are required to pay stamp duty. The extra cost burden will mostly fall on those living in Southern England, as there are 30 and 34% of first-time buyers in Eastern, Southeast and London regions looking to buy properties in the £300,000 to £425,000 price band.
The larger impact is likely to be felt on house prices in 2025, as buyers facing stamp duty costs will want to see them reflected in the purchase price.
Richard Donnell, Executive Director at Zoopla commented: “The growing complexity of SDLT makes assessing its impact on market activity and pricing increasingly difficult. Whilst an additional stamp duty payment of £2,500 might be more manageable for those purchasing £1m homes, it's a much bigger cost for those buying cheaper homes.
"Faced with this higher cost, home buyers will want it reflected in the price they pay for their home and will seek to make offers, keeping prices rises in check over 2025 and into 2026. These changes are likely to take 0.5 to 1 per cent off house price growth in 2025 hitting buyers in higher value markets and re-enforcing a north-south divide for price growth.”