Homebuyers rush to secure deals ahead Stamp Duty threshold changes
Santander UK has recorded a 130% rise in mortgage applications in the fourth quarter of 2024 compared to the same period in 2023, as homebuyers rush to secure purchases before Stamp Duty thresholds decrease in April.
With the bank estimating an average four-month gap between a mortgage offer and property completion, buyers securing financing before the end of 2024 stand a better chance of benefiting from lower stamp duty costs ahead of the deadline.
Under the new rules, the nil-rate stamp duty threshold for first-time buyers will drop from £425,000 to £300,000, while for other buyers, it will decrease from £250,000 to £125,000. This change means that first-time buyers purchasing homes between £300,000 and £500,000 will incur a 5% stamp duty charge on an additional £125,000, increasing costs by thousands of pounds. Meanwhile, all other buyer types will pay 2% on property values between £125,000 and £250,000, adding up to £2,500 in potential costs.
“We all know that buying a home – whether it’s our first or our forever home – comes with significant costs,” said Graham Sellar (pictured), head of intermediary channel for mortgages at Santander. “Every penny counts when considering things like legals and removals costs, so it’s great to see so many people make the most of the holiday and secure their new home ahead of April 1.”
The upcoming changes are expected to impact first-time buyers the most. In the South East, where the average house price is £385,600, those purchasing before the deadline could save up to £4,280 in stamp duty. Buyers in London, where average prices reach £535,700, could face an additional cost of £11,250 if their property exceeds £500,000.
Santander’s recent research suggests that first-time buyers are adjusting their expectations to step onto the property ladder. The study found that 67% of those who purchased their first home in the past two years had never visited the neighbourhood before buying, compared to 51% of buyers from more than five years ago. Buyers who relocated to unfamiliar areas saved an average of £29,000 compared to purchasing in their previous location.
Regions such as Waverley in the South East and Waltham Forest in Greater London have seen the most significant increase in first-time buyer activity over the past decade, reflecting continued demand.
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