"A return to the old rules and price thresholds would have seen 30% of first-time buyers paying stamp duty once again."
- Richard Donnell, executive director at Zoopla
Last week, Chancellor Jeremy Hunt announced a pledge not to increase stamp duty as part of the Conservative government's election campaigning.
Zoopla has now analysed first-time buyer enquiries to identify where the current stamp duty relief at £425,000 would be retained.
The current thresholds for first-time buyer stamp duty relief were planned to be cut in 2025. This would reverse changes made in the 2022 Mini budget where the threshold for full relief from paying stamp duty was raised to £425,000 from £300,000. In addition, the maximum value for partial relief for first-time buyers was raised from £500,000 to £625,000.
Analysis of enquiries for property on Zoopla from first-time buyers over the last six months shows that 8 in 10 searching for a home have been looking for homes priced under £425,000 i.e. full relief from stamp duty under current rules.
15% of first-time buyers have been searching for homes between £425,000 and £625,000 and would pay partial stamp duty, assuming the current rules are extended.
The remaining 7% are looking over the £625,000 threshold and would still have to pay full stamp duty.
The benefit of keeping the exemption from stamp duty at £425,000 helps those buying in London and southern England where up to half of first-time buyers are looking to buy homes priced between £250,000 and £425,000.
Data from HMRC shows that in England, 203,300 buyers claimed ‘first-time buyer relief’ from stamp duty in 2022/23 with savings of £708 million, or an average of £3,500 per purchase.
150,000 first-time buyers paid no stamp duty at all while 53,000 had to pay partial stamp duty for the purchase price above the current tax-free threshold of £425,000 up to a maximum of £625,000.
Richard Donnell, executive director at Zoopla, commented: "Our analysis of what first-time buyers are looking to buy on Zoopla shows 8 in 10 would pay no stamp duty if the current measures were made permanent. The greatest beneficiaries are those looking to buy across southern England where up to half of first-time buyers are looking to buy homes priced between £250,000 and £425,000. We find that 7% of first-time buyers would still pay full stamp duty, most of whom are looking in London and 15% would pay partial stamp duty.
"A return to the old rules and price thresholds would have seen 30% of first-time buyers paying stamp duty once again.
"The primary challenge for first-time buyers remains the need to afford higher mortgage rates and pass mortgage affordability tests. For many, this means injecting more equity into home purchases to reduce the level of income needed to buy. This impacts buyers across southern England where house prices are highest and average deposits are over £60,000
"Building more homes at a wider range of price points and developing a market for long term fixed-rate mortgages are the key building blocks to help first-time buyers long term"
