Brokers urged to think ahead, to protect themselves from impact of a slowdown
Brokers are being encouraged to prepare for a slowdown in business next year following an increase in activity from property buyers trying to rush through their purchases ahead of a lower threshold for Stamp Duty payments.
David Hannah (pictured), who is group chairman of Cornerstone Group - a firm dedicated to providing advice on tax liabilities for property buyers - urges mortgage advisers to think ahead to soften the blow.
From April 2025, the stamp duty exemption threshold for first-time buyers will drop from £425,000 to £300,000.
“In the short term, brokers may experience an uptick in activity as buyers rush to complete transactions before the April deadline,” Hannah told Mortgage Introducer. “However, once the reduced thresholds take effect, there is a real risk of a market freeze at the lower end, with fewer first-time buyers entering the market and landlords withdrawing investment.
“This could lead to a decline in transaction volumes, reducing revenue opportunities for brokers. Additionally, affordability challenges for buyers might make securing favourable lending terms more difficult, requiring brokers to invest more time and resources into each client.”
He added: “In such an environment, brokers will need to focus on delivering value-added services, such as bespoke financial advice, to remain competitive and maintain client trust. Diversifying their service offerings or expanding their client base - such as by targeting high-value transactions or specialised lending - could provide a buffer against declining transaction volumes and sustain business growth in challenging market conditions.”
Furthermore, Hannah believes that brokers need to be proactive in their communications with clients, ensuring they fully understand the implications of these changes.
“For first-time buyers, the priority should be on securing deals before the new thresholds come into effect,” he said. “For landlords and investors, brokers can provide tailored advice on restructuring portfolios or exploring alternative investment opportunities to offset additional costs.”
It is also critical for brokers to ensure clients have accurate Stamp Duty figures when calculating affordability, Hannah urged.
“Overestimating Stamp Duty can mislead buyers, causing them to miss opportunities to purchase their desired homes,” he warned. “Alarmingly, up to 40% of affordability calculations currently include incorrectly high Stamp Duty estimates.”
Read more: Revealed – impact of Stamp Duty relief cut on first-time buyers
Is the Stamp Duty revision the right approach?
Chancellor Rachel Reeves has received a lot of criticism for her October Budget and Hannah is unimpressed by her approach, believing she should have taken the opposite route.
“The decision to lower the Stamp Duty thresholds highlights a troubling lack of joined-up thinking within the government’s approach to housing policy,” he reasoned. “By reducing the exemption threshold, the government has inadvertently added financial strain to first-time buyers, discouraged landlords from investing in the rental market, and frozen working capital for developers - capital that is only unlocked when homes are sold.
“Rather than stimulating the housing market, this policy risks paralysing it at a time when affordability challenges are already high. Instead of lowering thresholds, the government should consider increasing them, particularly for first-time buyers. Raising the exemption threshold would reduce the amount they need to borrow, improving their affordability calculations and making it easier for them to enter the market.”
Hannah considers that introducing a Stamp Duty exemption for pensioners looking to downsize would also have a profound effect. By freeing up larger family homes, this measure would address a significant supply issue, allowing younger buyers to access properties better suited to their needs, he believes.
“As we all know, a rising tide lifts all boats,” he said. “Those looking to purchase properties on the mid-to-high end of the property market will now have a chance to sell their low-end properties as a result of the increase in demand from prospective buyers, contributing to further momentum within the housing market.”
In Hannah’s view the property market is likely to face significant headwinds in 2025.
“A sharp slowdown is expected in Q2 as affordability pressures intensify and buyer confidence wanes,” he declared. “Stamp Duty receipts are likely to fall, with a flatlining housing market creating knock-on effects for developers, landlords, and associated industries.
“Without corrective measures to stimulate the market - such as raising thresholds, supporting first-time buyers, or incentivising downsizing - the housing sector risks entering a prolonged period of stagnation. The government must recognise that housing is a cornerstone of economic stability and implement policies that foster growth and accessibility across all segments of the market.”
