First-time buyers scramble to complete home purchases before stamp duty rise

First-time buyers are rushing to complete their purchases with just days left before soaring stamp duty rates slam the door shut.

From 1 April, the rate where there is no stamp duty tax to pay will shrink. First-time buyers will see their “nil rate” band reduce from £425,000 to £300,000 at the beginning of next month, and home movers will see their zero rate threshold halve from £250,000 to £125,000.

Those attempting to get onto the property ladder now have three days to finalise house transactions to save on stamp duty, leading them to scramble and sign all paperwork. First-time buyers currently pay no stamp duty up to £425,000 and 5 per cent on any portion from £425,001 to £625,000.

Government figures released on Friday show there has been a huge surge in homes being bought in the first two months of the year. Statistics from HM Revenue and Customs showed there were more than 108,000 homes bought and sold in February, a 28 per cent jump compared to February 2024.

It was also a 13 per cent jump compared to January, and it is the highest February figure since 2022 when interest rates spiked significantly driving up the cost of a mortgage.

First-time buyers in London who are attempting to get deals over the line before being clobbered by the higher rates are particularly affected, according to Rightmove.

The website estimates that less than one in 10 (9 per cent) homes on the market in the capital are priced under the £300,000 “nil rate” threshold kicking in from 1 April, compared to 27 per cent which is under the current £425,000 zero stamp duty threshold.

By comparison, in the North East of England, three-quarters (74 per cent) of homes for sale will still be under the new April threshold, down from 87 per cent currently, Rightmove estimates.

First-time buyers who finalised their purchases before the stamp duty deadline expressed their relief.

First-time buyer Jenny Lianos, 32, recently completed a deal on a one-bedroom flat in Chiswick, London.

She said: “I put in the offer in January, and since then it’s been a race to complete ahead of the stamp duty deadline. I paid £525,000 for the property and knew from the outset that stamp duty could be a deal breaker.

“Completing the sale in March meant that I paid £5,000, however, if this had been pushed into April, I’d have had to pay £16,250.”

Law firm Taylor Rose also said it has seen conveyancing instructions nearly double in the first two months of this year, compared with the same period a year earlier.

Zoopla calculated that the proportion of first-time buyers in England and Northern Ireland who will need to pay stamp duty will double from April. The website estimates the share of first-time buyers paying the tax will jump from 21 per cent to 42 per cent.

Overall Zoopla estimates that the stamp duty changes could raise an extra £1.1 billion annually for the government.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The starting pistol has finally fired for the race for the end of the stamp duty holiday, with February sales up 13% from January and 28% from a year earlier. With the window set to slam shut at the end of March, buyers are scrambling to take advantage, and we could see another bumper month in March.

“It’s a decidedly late flurry, and will owe much to the fact that some people will have put purchases on hold until after the autumn Budget, for fear of what it might hold in store. The fact that things weren’t quite as hard as had been feared meant buyers flocked back to the market.”