The UK property market is facing a significant shift in 2025, as the temporary Stamp Duty relief introduced in previous years is set to end on March 31, 2025. This means buyers will soon face higher upfront costs when purchasing residential property, with first-time buyers being hit the hardest.
If you're considering a purchase, now is the time to understand how this change could affect your budget and decision-making.
Either contact Rocket Property Management for a free consultation to find out how you should be dealing with the upcoming changes, or keep reading and we'll explain what you need to know:
What’s Changing with Stamp Duty?
Currently, there is a Stamp Duty Land Tax (SDLT) relief that allows all buyers to pay zero tax on the first £250,000 of a property's value. From April 1, 2025, this relief will end, and the new Stamp Duty rates will apply as follows:
- Up to £125,000 – 0%
- £125,001 to £250,000 – 2%
- £250,001 to £925,000 – 5%
- £925,001 to £1.5 million – 10%
- Above £1.5 million – 12%
For first-time buyers, the change is even more significant. Currently, they benefit from an exemption up to £425,000 and then 5% on the portion from £425,001 to £625,000, but from April, they will only get relief up to £300,000, meaning higher costs when stepping onto the property ladder.
How Much More Stamp Duty Will Buyers Pay?
For a typical homebuyer purchasing a property for £295,000, here’s the difference in Stamp Duty costs:
- Before April 1, 2025: £2,250 (due to relief)
- After April 1, 2025: £4,750
- Extra Cost : £2500
For first-time buyers purchasing a property worth £500,000, the impact is even greater:
- Before April 1, 2025: £3750
- After April 1, 2025: £10,000
- Extra cost: £6250
These changes mean that buyers need to find extra cash for Stamp Duty, making affordability even tougher in an already challenging market.
Why Is This Happening?
The Stamp Duty relief was introduced to stimulate the housing market and support first-time buyers, but it was always intended to be temporary. The government has now decided to remove it, citing budget constraints and the need to focus on other economic priorities.
How Will the Market React to Stamp Duty Changes?
Experts predict a surge in transactions before the March 31 deadline as buyers rush to complete purchases before the tax increase. After April 1, we could see a slowdown in market activity, particularly from first-time buyers, who will find it harder to afford the upfront costs.
However, property prices may adjust to reflect the higher tax burden. Sellers may need to lower asking prices to attract buyers, creating potential opportunities for savvy investors.
What Should Buyers Do?
If you're planning to buy, acting before March 31, 2025, could save you thousands in Stamp Duty costs. Here’s what you can do:
- Speed Up Your Search – If you’ve been considering a purchase, now is the time to act. Get your mortgage agreement in principle and start viewing properties.
- Move Quickly with Conveyancing – The legal process can take several weeks, so make sure your solicitor is on board early to avoid missing the deadline.
- Negotiate Smartly – If you’re buying after April 1, use the higher Stamp Duty costs as leverage to negotiate a better deal.
- First-Time Buyers Should Plan Carefully – If you're struggling with affordability, consider options like shared ownership, government schemes, or delaying your purchase until savings recover.
What About Investors?
For landlords and property investors you will usually have to pay 5% on top of the SDLT rates set out above if you are buying a new residential property, as this will mean you will own more than one property, and then an extra 2% surcharge if you are not a UK resident. So, the extra costs should be factored into purchase decisions.
However the overall market outlook remains positive. Rental demand is expected to remain strong, and interest rates may drop later in the year, supporting capital appreciation in the long term.
Final Thoughts
The end of Stamp Duty relief marks a major turning point for the property market. Buyers who act quickly can still benefit from lower upfront costs, but after April 1, the increased tax burden could slow the market and put downward pressure on prices.
If you’re thinking about buying, now is the time to get your finances in order and take advantage of the savings before the March 31 deadline.
However, if you are not able to move quickly there could be some good opportunities if prices fall after 1st April. Either way we believe these changes are a short term “interference” in the market, which will be evened out in London by falling interest rates and a fundamental lack of supply.
For tailored investment opportunities or expert advice, contact Rocket Property Management today for a free consultation.
