First-time buyers dominated property market activity in November, December and January, accounting for 64% of home mover activity in December 2024 – a record high – and 63% in January 2025, as the deadline for increased stamp duty bills looms on 31 March.
New data from reallymoving, the comparison site for home movers, shows that despite continued affordability challenges, cheaper mortgage deals and the prospect of higher buying costs around the corner has spurred many First Time Buyers into action. However, with conveyancing taking 151 days (5 months) on average, those who are not already in the conveyancing process have little hope of completing before the deadline and should budget for higher bills.
On the 1 April, the temporary higher threshold at which Stamp Duty is payable for first time buyers, currently £425,000, will be reduced back to £300,000, meaning the proportion paying stamp duty will more than double from 17% currently to 40%. Based on the average FTB purchase price in England of £293,174, there will still be no Stamp Duty to pay when the threshold is increased, but the proportion of FTBs paying Stamp Duty will rise in every region of the UK with those in London and South East most heavily impacted.
In London, where first time buyers pay £438,442 on average, stamp duty bills will jump by £6,250 from £672 to £6,922, with the proportion paying the tax increasing from 46% currently to 79%. In the South East, where buyers pay £330,441 on average to buy a first home, average bills will rise from zero to £1,522 – pulling 56% of first-time buyers over the tax threshold.
Mortgage rates fell in 2024, with the lowest available rate for a 2-year fixed rate deal currently at 4.2%, or 4.07% for a 5-year fixed rate mortgage. A further base rate cut in February would help bring costs down further and encourage lenders to compete for business as the traditionally busy spring market approaches.
Speculation that financial regulators may allow lenders to relax mortgage lending rules as part of the government’s pro-growth agenda, allowing homeowners to borrow more relative to their income, may also bring welcome news for first-time buyers struggling to save a deposit. Reallymoving’s research shows it takes nearly 6.5 years to save to buy a first home, assuming first-time buyers can afford to put aside 10% of their salary each month. Based on the UK average FTB purchase price, they need to raise £25,554 to cover a 10% deposit and additional moving costs such as conveyancing, a survey and removals.
Rob Houghton, founder and CEO of reallymoving, said: “First-time buyer activity increased sharply from October through to the end of last year, and has stayed high into January. The prospect of higher stamp duty bills is undoubtedly a factor, with savings of over £6,000 up for grabs if First Time Buyers in London can complete before the deadline, and over £1,500 in the South East.
“The homebuying process continues to take much longer than it used to, and conveyancers have a very busy and stressful few weeks ahead of them, so many first-time buyers will end up disappointed. If you’re buying at over £300,000 and you’re not already well advanced in the conveyancing process, don’t just hope for the best. Make absolutely sure you have flexibility in your budget to accommodate higher bills.”
Read the orginal article: https://propertyindustryeye.com/first-time-buyer-share-hits-record-high-as-stamp-duty-deadline-looms/
