Changes to stamp duty at the end of March are expected to raise an additional £1.1bn in tax revenue as research suggests four in five existing home owners will be drawn into the reduced nil rate band brackets from 1st April.
Research from property portal Zoopla suggests that around 49% of existing home owners who move currently pay SDLT; from 1st May that will increase to 83%. And while over half of first time buyers (FTBs) will continue to pay no stamp duty, the proportion will still double, hitting higher value homes in London and the South East.
In the week in which HMRC announced stamp duty revenues are £2.4bn higher from April 2024 to January 2025, at £15.1bn, no doubt in part due to the increase in buyers trying to complete before the end of the the current reliefs, Zoopla say an additional 21% of FTB sales, and 34% of home owner sales will have SDLT applied where it wouldn’t previously.
At a regional level Zoopla estimates the North West will see the largest uplift in home owner moves which will be come eligible for SDLT; from 16% pre 31st March 2025, to 83% after, a 67% uplift. The East Midlands will see a 55% increase, with Northern Ireland (50%) and Yorkshire and Humber following on 47%. The statistics are borne out in the recently published Office for National Statistics (ONS) House Price Index which shows the national average house price sits squarely in the £125,001 to £250,000 property value bracket, at which 2% is charged from 1st April 2025. The ONS’s latest figures show there has been an annual price rise in England of 4.3% from December 2024 to December 2025, taking the average property value up from £279,000 to £291,000. Less than a fifth of homeowners (17%) will pay no stamp duty on purchases below £125,000 following the changes. The number are based on the assumption movers are changing their main residence, rather than purchasing an additional residence, where the 5% surcharge remains.
For FTBs the issue is more acute in London, the South East, and Eastern England. By analysing the number of FTB enquiries agents are receiving, Zoopla estimates an additional third of transactions will be subject to SDLT from 1st April; with Londoners likely to be paying SDLT in 79% of FTB purchases, and those in the South East and Eastern England in half of purchases.
Richard Donnell, Executive Director at Zoopla comments
“Stamp duty has become a big source of tax revenue, approaching £10bn a year for the government. The reduction in tax reliefs from April will see more home buyers paying stamp duty. Existing homeowners will pay up to £2,500 more for each purchase across a large number of sales. The average seller has made £60,000 in capital gains so there is flexibility to absorb this cost but buyers will expect to factor this extra cost into what they offer.
“It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the most where buying costs are already high. This will reduce buying power and market activity at a local level. Stamp duty is a big tax on home movers in southern England where affordability problems are already a major challenge. The case for reforming stamp duty remains but the question is where to replace the multi-billion in annual tax revenues.”
