Budget change could see house buyers hit with extra £2,500 bill

A scheme that reduced the cost of stamp duty on home purchases is anticipated to be scrapped by the Chancellor in the Budget. This move could add an extra £2,500 or more to the cost of buying a property, based on the average sale price for England at £300,830.

The changes are expected to particularly impact first-time buyers and those in the south of England, with around 309,000 additional purchases a year becoming subject to the tax. In 2022, the Liz Truss government temporarily raised the house price thresholds at which stamp duty is paid from £300,000 to £425,000, aiming to assist people onto the property ladder.

However, Rachel Reeves is predicted to lower the stamp duty threshold back to £300,000 from April 2025, meaning thousands of buyers will now have to pay the property tax. Concurrently, a stamp duty dispensation scheme aiding first-time buyers purchasing homes worth between £425,000 and £625,000 is likely to be scaled back.

These moves, set to be announced in the Budget, are predicted to spark a rush in property sales over the coming months and into the New Year as buyers attempt to avoid it. Industry experts forecast that the number of first-time buyers paying stamp duty will triple from 8 percent to 26 percent when the threshold returns to £300,000. In London, where property prices are significantly higher, the proportion paying stamp duty will rise to 71 percent.

From April 2025, the expected stamp duty rates will be zero for homes up to £125,000; 2 percent for those between £125,001 and £250,000; 5 percent for properties ranging from £250,001 to £925,000; 10 percent for homes priced at £925,001 to £1.5 million; and 12 percent for those over £1.5 million. For first-time buyers, the rates would be zero on