To those of us working in the mortgage industry, the words “stamp duty deadline” will remind us of the last deadline of 2021. However, there is another one on the horizon.
One of the legacies of the mini Budget announced on 23 September 2022 was to temporarily increase the amount that a purchaser can pay for a residential property before they become liable to stamp duty land tax (SDLT), and this will come to an end on 31 March 2025.
It increased the residential nil-rate tax threshold from £125,000 to £250,000. For first-time buyers, relief was also temporarily increased from £300,000 to £425,000, and the maximum property value that is eligible for first-time buyers’ relief was increased to £625,000.
It is vital for us to ensure our customers are aware of this deadline, as this could potentially add costs they may not have budgeted for. A first-time buyer could find that they are given a higher stamp duty bill than expected, which could cause house purchases to not complete if they had not budgeted for this.
Looking at market completion data over the last few years in the table below, we can see completions increased in 2021, but we can also see the number of completions increased further in 2022. Therefore, it could be argued that the stamp duty relief at the time was not as much of a driver of completions as thought.
Market Moves: Understanding UK Housing Trends
Introducing the first in our video series “Market Moves: Understanding UK Housing Trends” The
Sponsored by Halifax Intermediaries
What will be the impact of the potential 2025 stamp duty threshold change?
This then poses a few questions. Are we going to see a similar picture of increased completions this year and into the early part of 2025? And is there something other than stamp duty that needs to be changed within taxation to allow more purchases?
All eyes are currently on a few dates in the future:
- 30 October 2024 – Budget Day
- 7 November 2024 – Bank of England Monetary Policy Committee Meeting
- 19 December 2024 – Bank of England Monetary Policy Committee Meeting
There are many rumours about the announcements that will be made on the day of the Budget. However, we will not know what will be announced for sure until Rachel Reeves stands with the red box in Parliament.
The data shows there are many more variables than a stamp duty holiday or relief that will drive mortgage completions. Affordability, interest rates and property availability, to name just three, will also have a big impact on completion numbers, as we can see how 2023 completion figures have been affected by a cost-of-living crisis, higher interest rates and lower affordability.
While any support to help would-be purchasers get into their homes would be welcome, it is clear if we really want to move the dial, we will need to ensure that the right type of homes are available to purchase, they are affordable for the customer and the associated costs with purchasing a home are manageable.
