The true cost of Stamp Duty is two thirds higher than the tax bill itself, according to analysis from Coventry Building Society.
The mutual says the result is that homebuyers are spending thousands of pounds more than they perhaps realise. The upfront tax bill on their home could eat into a buyer’s deposit, causing them to borrow extra and ultimately pay thousands more in interest over the life of the mortgage.
The Coventry says that the hee cost of Stamp Duty is only set to get worse next month when the nil rate threshold drops from £250,000 to £125,000 – putting an extra £2,500 on the cost of an average-priced home in England. For first time buyers, the threshold will drop from £400,000 to£325,000.
The lender’s calculations show that someone borrowing £5,000 more to cover the Stamp Duty on their £300,000 home will actually pay £8,337 over the term of a 25 year mortgage – an increase of 66.7%. This is assuming a mortgage rate of 4.50%.
The true cost of Stamp Duty, depending on the house price:
| House price | Stamp Duty bill from April 2025 |
True cost over a 25 year mortgage |
| £300,000 | £5,000 | £8,337 |
| £350,000 | £7,500 | £12,507 |
| £400,000 | £10,000 | £16,674 |
| £450,000 | £12,500 | £20,844 |
| £500,000 | £15,000 | £25,014 |
| £550,000 | £17,500 | £29,181 |
| £600,000 | £20,000 | £33,348 |
| £650,000 | £22,500 | £37,521 |
| £700,000 | £25,000 | £41,688 |
| £750,000 | £27,500 | £45,855 |
| £800,000 | £30,000 | £50,025 |
| £850,000 | £32,500 | £54,195 |
| £900,000 | £35,000 | £58,362 |
| £950,000 | £38,750 | £64,614 |
| £1,000,000 | £43,750 | £72,954 |
Calculations are based on borrowing over a term of 25 years at a rate of 4.50%
Landlords or anyone buying a second property – which includes those buying a new home while still named on the family home following a split – face higher Stamp Duty costs to begin with, as they have to pay a 5% surcharge.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “Stamp Duty has long been considered an additional burden to homebuyers, and from the 1st April its set to get even worse. Some bills will increase by thousands of pounds overnight, so if buyers don’t have that lying around the chances are they’ll need to eat into their deposit to cover the bill – making the amount they pay in real term shoot up by thousands.
“As a basic rule of thumb, buyers taking a 25 year mortgage at a rate of 4.50% will end up paying around two thirds more if they need to borrow extra for their stamp duty bill – and this will be even higher if they take their mortgage over a longer term. The extra borrowing can also make a difference to the rate they pay, as people with larger deposits have a lower loan to value so typically get a better rate of interest.
“Many buyers will feel the effects of this extra borrowing for years to come, and the wider housing market could take a hit too. Higher Stamp Duty bills could lead to fewer transactions or a shift in demand, as buyers may be forced to delay purchases or lower their budgets to compensate.”
