The UK property market is currently benefiting from the upcoming Stamp Duty Land Tax (SDLT) changes, which will take effect on April 1st.
In order to take advantage of the current, more favourable SDLT rates prior to the implementation of the new thresholds and rates, buyers are expediting their purchase plans. Compared to the same period last year, there are 13% more first-time buyers actively shopping and contacting agents, while on October 31st last year the surcharge for second properties went up from 3% to 5%.
Properties up to £250,000 are exempt from SDLT under the current system, while higher values are subject to incremental rates. On properties up to £425,000, first-time buyers are eligible for a discount. These thresholds will return to their prior levels starting in April 2025, with the first-time buyer relief dropping to £300,000 and the nil-rate band dropping to £125,000.
As buyers try to finish purchases before the deadline, the expected rise in transaction costs is driving up market activity. In December last year, Nationwide reported a 0.7% increase in home prices, which they attributed to buyers scrambling to avoid these anticipated higher SDLT rates.
The first three months of this year are going to be especially busy as investors, first-time buyers, and house movers all attempt to finish planned purchases and avoid higher fees. Stamp duty increases will have an impact throughout the remainder of the year as well, and we might witness some negotiating strategies, especially for properties near the £300,000 mark, as both buyers and sellers attempt to offset their increased expenses with the agreed-upon price.
