How will April’s stamp duty increase affect the housing market?
With the start of the new tax year comes a significant change to the UK property market, as Stamp Duty Land Tax (SDLT) rates increase. This might have a major impact on your purchasing decisions and overall property plans.
What is stamp duty, and what’s changing?
Stamp duty is a tax you pay when purchasing a property in the UK. It’s calculated based on the price of the property you buy, with different rates applying depending on whether the property is residential or non-residential. In April 2025, the government increased these rates, meaning that homebuyers now pay more tax when purchasing a property.
The new stamp duty rates
Source: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
So how could this increase affect you?
- Higher upfront costs
The most immediate impact of the stamp duty increase is higher costs at the time of purchase. With additional stamp duty to pay, you may struggle to cover the increased expenses or have to adjust your budget, potentially opting for a less expensive property or delaying your purchase altogether.
- First-time buyers feeling the squeeze
If you're a first-time buyer, you could especially feel the pinch as you’re already faced with saving for a deposit and managing other upfront costs. The increase in stamp duty could make it even harder to get onto the property ladder, especially if you were already working with a tight budget. The additional tax may mean that saving for a deposit takes longer, and some you might reconsider buying altogether or look for ways to lower your costs—like considering a smaller home or a less expensive location.
- Reduced market activity
As the cost of buying a property rises, the overall activity in the housing market could slow down. Some buyers may have chosen to wait until now the increase has been implemented to see how it impacts house prices, while others may be priced out altogether. If demand falls, this could lead to fewer transactions, causing a dip in overall market activity.
- Potential for lower house prices in certain areas
If buyers become more cautious due to the stamp duty increase, we could see a reduction in demand for properties in certain regions. In particular, more expensive areas where buyers are already stretched might experience a cooling in house prices. Sellers in these areas may need to adjust their expectations and lower prices to attract buyers.
However, in areas with less expensive homes, demand could remain strong, as first-time buyers or investors may still be able to afford the upfront costs. Therefore, the impact on property prices will likely vary by region, with some areas seeing more significant shifts than others.
Why independent mortgage advice is essential during this transition
If you're planning to buy a property in or after April 2025, seeking mortgage advice is more important than ever. It's crucial to understand how the stamp duty changes will affect your overall budget and financing options.
We can help you assess your financial situation and recommend the best mortgage options to accommodate the additional costs. We’ll also be able to guide you through the various stamp duty rules, ensuring you’re prepared for the full financial impact of your property purchase. Plus, with interest rates and lending criteria constantly changing, expert mortgage advice can ensure you secure the best possible deal in a fluctuating market.
