Four in five homeowners in England and Northern Ireland to pay more stamp duty

The cost of buying a home will increase for the majority of home buyers in England and Northern Ireland from April when the stamp duty land tax (SDLT) relief introduced in the 2022 mini budget ends and reverts to previous rates.

New analysis from Zoopla reveals that the impact and extra cost will vary across the country and between existing homeowners and first-time buyers as different rates apply.
Overall Zoopla estimates that these changes will raise an extra £1.1bn a year in stamp duty for the government.

From the 1st April of 2025, four in every five (83%) homeowners will pay stamp duty on buying a main residence, up from 49% today, as the 2% rate between £125,000 and £250,000 returns. Less than a fifth of homeowners (17%) will pay no stamp duty on purchases below £125,000.

Zoopla stamp duty
Source: Zoopla analysis of applicant enquiries by type of buyer and property price Q4 2024 – excludes the impact of those buying ‘additional’ homes.

This means that the 49% of homeowner purchases over £250,000 will pay an extra £2,500 in stamp duty from April.

The 33% of buyers purchasing between £125,000 and £250,000 will pay 2% on the purchase price up to a maximum of £2,500. Zoopla estimates this will generate an additional £900m in stamp duty.

The biggest jump in buyers paying stamp duty will be in the West Midlands where 66% more sales will pay from April, followed by 55% in the East Midlands and 50% in the North West.

NUMBER OF FTBs PAYING STAMP DUTY DOUBLES

First-time buyers will pay stamp duty on purchases over £300,000 from April, meaning three in five (58%) will avoid this extra cost of buying. This helps those buying in areas with lower house prices. The number of first-time buyers liable to pay stamp duty will be the lowest in the North East (2%), Yorkshire and the Humber (three per cent), Northern Ireland (5%) and the North West (5%).

However, the proportion of first-time buyers liable to pay stamp duty will double to 42% from April, hitting London and South East buyers in the £300,000 and £625,000 range the hardest, with costs of up to £15,000 per purchase.

Buying at £350,000 will cost £2,500 per purchase, up from £0 today. Buying a £500,000 home will cost £10,000 in stamp duty, up from £3,750 today and buying at £550,000 will jump from £6,250 to £15,000. Zoopla estimates this will generate an additional £200m in stamp duty.

BIG TAX REVENUE
Richard Donnell, Director of Research & Insight, Zoopla
Richard Donnell, Director of Research & Insight, Zoopla

Richard Donnell, Executive Director at Zoopla, says: “Stamp duty has become a big source of tax revenue, approaching £10bn a year for the government. The reduction in tax reliefs from April will see more home buyers paying stamp duty.

“Existing homeowners will pay up to £2,500 more for each purchase across a large number of sales. The average seller has made £60,000 in capital gains so there is flexibility to absorb this cost but buyers will expect to factor this extra cost into what they offer.”

REDUCED BUYING POWER

He adds: “It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the most where buying costs are already high. This will reduce buying power and market activity at a local level.

 “Stamp duty is a big tax on home movers in southern England where affordability problems are already a major challenge. The case for reforming stamp duty remains but the question is where to replace the multi-billion in annual tax revenues.”

BUYER IMPACT
Toby Leek, Propertymark
Toby Leek, Propertymark

Toby Leek, NAEA Propertymark President, says: “The increase in Stamp Duty charges from April is clearly going to impact buyers in some parts of the country more than others.

“London and the South East are the two most expensive regions in England to buy a house, and April’s changes will make it harder for first-time buyers to step onto the housing ladder compared to those living in the North of England.

“Even though the Office for National Statistics figures show that earnings growth rose to 5.9% house prices continue to be over 10 times more expensive than the average salary needed to buy a home.

“However, in order to bring house prices down in the long term, Propertymark looks forward to hearing from the UK Government how they intend to recruit the necessary workforce to build 1.5 million new homes by 2029.”

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