Santander has reported a 130% increase in mortgage applications in the final quarter of 2024 compared to the same period in 2023, as buyers rush to complete purchases before changes to stamp duty take effect on 1 April 2025.
The government’s temporary stamp duty relief, introduced to support homebuyers, will end in April, reducing the nil-rate threshold for first-time buyers from £425,000 to £300,000. For other buyers, the threshold will drop from £250,000 to £125,000, meaning many will face significantly higher tax bills if they do not complete their purchases before the deadline.
INCREASED COSTS FOR FIRST-TIME BUYERS
The changes will have the biggest financial impact on first-time buyers purchasing homes priced between £300,000 and £500,000, who will be subject to a 5% stamp duty charge on an additional £125,000 of borrowing. This could add thousands of pounds to their overall costs. Other buyers will see a 2% charge applied to the portion of their property’s value between £125,000 and £250,000, increasing their tax bill by up to £2,500.
Santander estimates that the average property purchase takes four months from mortgage offer to completion, meaning those who secured an offer before the end of 2024 have maximised their chances of benefiting from the lower stamp duty rates.
In the South East, where the average property price is £385,600, first-time buyers purchasing before 1 April could save up to £4,280 in stamp duty. In London, where the average property price is £535,700, first-time buyers could see an additional cost of £11,250 if they purchase after the deadline.
| Region | Average house price | Stamp duty before 1 April | Stamp duty after 1 April |
|---|---|---|---|
| South East | £385,600 | Nil | £4,280 |
| London | £535,700 | £5,535 | £16,785 |
SHIFT IN BUYING BEHAVIOUR
Research by Santander suggests that affordability pressures have already led to changes in buyer behaviour, particularly among first-time buyers. The bank found that 67% of those who bought their first home in the past two years had never visited their new neighbourhood before purchasing, compared to 51% of those who bought more than five years ago.
Santander’s findings indicate that first-time buyers who moved to new areas saved an average of £29,000 compared to purchasing in their previous location.
Graham Sellar, head of intermediary channel – mortgages at Santander, said the rush to secure lower stamp duty costs highlights the financial pressures buyers face.
He added: “We all know that buying a home – whether it’s our first or our forever home – comes with significant costs.
“Every penny counts when considering things like legal and removal costs, so it’s great to see so many people make the most of the holiday and secure their new home ahead of 1 April.”
The demand for first-time buyer properties has been particularly strong in areas such as Waverley in the South East and Waltham Forest in Greater London, where sales to first-time buyers have increased significantly over the past decade.
