Property buyers have just 18 months to avoid a stamp duty hike which could cost thousands of pounds.
The temporary increase to stamp duty thresholds will end on March 31, 2025, and it’ll mean tax on an average priced home in England is set to jump by £2,500.
Buyers currently only pay stamp duty if the home costs more than £250,000, but this will drop back to £125,000 when the temporary increase ends.
It will take the tax bill on an average priced home in England from £2,822 to £5,322, according to analysis by Coventry Building Society.
Buyers currently only pay stamp duty if the home costs more than £250,000
PA
First-time buyers currently pay stamp duty if the home costs more than £425,000.
This threshold is set to drop to £300,000 in March 2025.
The building society is warning buyers of the deadline, suggesting those intending to buy after this deadline may need to plan ahead if they think they will be affected.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “Buyers need to know the reduction in thresholds isn’t forever – in eighteen months’ time people buying a home over £250,000 will suddenly have to pay an extra £2,500 in tax.
“That means buyers would need to start saving an extra £140 per month now just to cover the tax hike on their home.
“In an ideal world, the Chancellor is busy cooking up some long-term plans for stamp duty which will stop the tax bill on an average-priced home virtually doubling overnight.
“Homebuyers didn’t get a mention in the Spring Budget, so let’s hope there’s something a lot more positive for them in the Autumn Statement.”
Homebuyers collectively paid £1.1billion in stamp duty in August – the highest monthly figure so far this year, the society said.
Coventry Building Society called for stamp duty reform with targeted help for downsizers, last month.
While the current system offers one-off support for first-time buyers, there is no support for downsizers, which could deter people from moving to a more suitable-sized property later in life, the Society said.
LATEST DEVELOPMENTS:
Homebuyers collectively paid £1.1billion in stamp duty in August
PA
Mr Stinton said it could impact the supply of larger family homes, preventing people moving up the property ladder.
He added: “There are many people who want to move down the ladder as well as up, but the current Stamp Duty regime does more to deter downsizers than incentivise them.
“The concern here is that we’ll have swathes of people living in homes which aren’t right for them anymore. Most people will want to downsize and save money, but it could cost people thousands of pounds to end up with something which is ultimately less valuable. There could be many cases where it just doesn’t make financial sense to move.
“The temporary thresholds are lightening the load for all homebuyers at the minute, but – like the stamp duty holiday before it – it’s short-term thinking which is only giving relief to buyers at a pinpointed moment in time. The long-term solution needs to come without a sell-by date and aim to support buyers who need to move both up and down the ladder.”
