Stamp duty changes push 1 in 4 homebuyers out of the market

For thousands of hopeful homebuyers across the UK, the dream of owning a home is slipping further out of reach.

As stamp duty reforms loom, many are racing against time to complete their purchases before a sudden tax hike makes homeownership even more unaffordable.

With new thresholds set to take effect on April 1, experts warn that these changes could derail the housing market and push even more buyers out of contention.

Stamp duty reforms to push thousands out of the housing market

As sweeping stamp duty changes threaten to add thousands of pounds to their tax bills, homebuyers have been rushing to beat the deadline as many panic over the incoming extra charges they will have to face.

Currently, buyers of homes worth up to £250,000 are exempt from stamp duty, but next month this threshold will be halved to £125,000. First-time buyers will also see their exemption drop from £425,000 to £300,000, intensifying concerns about affordability at a time when house prices remain high.

David Hannah, Group Chairman of Cornerstone Tax, warns that these changes could shatter homeownership dreams for thousands of aspiring buyers. "With 26% of Brits already unable to afford property due to stamp duty costs, the government should be addressing affordability rather than implementing reforms that make it even harder to buy a home," he said.

David Hannah

David Hannah is the Group Chairman of Cornerstone Tax, a leading UK-based property tax advisory firm. He is an expert in stamp duty, a complex tax that property buyers face in the UK.

Stamp duty bills to surge by thousands

The financial burden of these changes is already taking shape. First-time buyers who benefitted from the pandemic-era stamp duty holiday now face tax bills of up to £6,205.

Data from the Skipton Group reveals that the proportion of areas in England where the average first-time buyer home is subject to stamp duty will jump from 8.4% to 32%.

According to Rightmove, 25,000 first-time buyers and 74,000 home movers currently in the process of purchasing a home may struggle to complete their transactions before the deadline, leading to additional tax costs. Mortgage brokers have reported an increase in buyers pulling out of deals due to fears of missing the cutoff.

Further research from Cornerstone Tax found that 14% of Brits have had to take out short-term loans or emergency credit to cover unexpected stamp duty bills. The lack of awareness surrounding stamp duty liabilities remains a major issue, with 61% of those looking at buying a house – equivalent to over 15 million people – never considering whether they overpaid or if a mistake was made in their calculations.

How this will impact homebuyers and the housing market

Experts warn that these reforms could have dire consequences for first-time buyers and the wider housing market.

A previous stamp duty holiday enabled 18% of first-time buyers to step onto the property ladder, demonstrating how crucial tax incentives are in encouraging homeownership.

David Hannah criticises the government for failing to address the broader housing affordability crisis. "The decision to abolish Multiple Dwellings Relief (MDR) will reduce investment in housing development and drive up prices," he explained. "By removing key tax incentives, the government is not only discouraging first-time buyers but also undermining the build-to-rent sector."

With property transactions surging ahead of the April deadline, many buyers remain uncertain about their stamp duty obligations, further complicating an already challenging market. Industry experts urge the government to reconsider these tax changes and prioritise policies that promote affordability and accessibility.

"The government must listen to property firms and stakeholders before this crisis escalates," Hannah warned. "If these reforms are not reversed, the UK's housing market will face continued chaos for years to come."