More than nine in 10 homes for sale will incur stamp duty from March

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More than nine in 10 homes for sale in England will incur stamp duty from March 2025, according to new analysis. 

The thresholds at which people start paying the property purchase tax will revert to the levels set before temporary changes were made in 2022, meaning more home buyers will be drawn into the net. 

The price at which stamp duty starts to be charged will revert back to £300,000 for first-time buyers, from its current level of £425,000. 

For all other buyers, it will be reduced to £125,000 from the current level of £250,000.

It is widely expected that the chancellor will decide not to continue the increase in the thresholds at which people start paying Stamp Duty

It will result in buyers having to pay stamp duty on 93 per cent of properties on the market in England, according to Leeds Building Society.

At the moment, buyers would only pay stamp duty on 70 per cent of houses on the market.

When the threshold rises again, the amount owed on a typical home could go from £2,169 to £4,669, based on the average price of £293,299 in the latest Halifax house price index. 

In cheaper areas of the country, many more home buyers will have to pay the tax when they currently do not. In Yorkshire, buyers currently pay stamp duty on 49 per cent of houses currently on the market. 

However, once the anticipated changes come into force, this will increase to 86 per cent of homes in the county.

First-time buyers to lose out 

There have been calls for Chancellor Rachel Reeves to retain the current thresholds permanently, in line with Labour's pledge to get more properties into the hands of first-time buyers.

However, it is not thought that the policy will be included in tomorrow's Budget. 

The housing market has changed dramatically in recent decades. Leeds BS's data suggests that house prices paid by first-time buyers were 16 times higher in 2022 than in 1982, whilst gross earnings were just seven times higher. 

Since late 2022, a first-time buyer purchasing a property up to the value of £425,000 has paid no stamp duty. If their home is more expensive, they only pay the tax on the portion above £425,000.

However, if this limit drops back to the old threshold of £300,000 from 31 March 2025, it means the same £425,000 purchase will be subject to a £6,205 tax bill.

At the moment, stamp duty is charged at 5 per cent on the portion of the purchase price from £250,001 to £925,000, 10 per cent on the portion from £925,001 to £1.5 million, and 12 per cent on anything above that. 

Research by Leeds BS shows that with the changes to stamp duty predicted in tomorrow's budget, buyers will be required to pay stamp duty on 93% of houses on the market

The additional stamp duty means it could take longer for first-time buyers to save up enough to get on the housing ladder, according to Leeds BS.

It says that from 31 March, the average first-time buyer renting privately in London will need to save for up to an additional 12 months to afford their own property.

Andrew Greenwood, deputy chief executive of Leeds BS, said: 'We all know the value that having a place to call home can add to our lives.

'As a mutual, we were set up to help people own their own home and save for their future, creating a sense of belonging in communities across the country.

'We welcome the Labour Government's commitment to social and affordable housing and renewed interest in house building, but our country needs to develop a long-term and joined-up plan to improve stability in the housing market if we are to solve the problem. 

'This needs to be a plan focused on delivering more homes, supporting first-time buyers to save for their deposit and extending affordable routes into home ownership.'