The first-time buyer stamp duty threshold has fallen back from £425,000 to £300,000 and the nil rate has reverted from £250,000 to £125,000 from 1 April. The changes had been introduced as part of the mini Budget in 2022.
Brokers and conveyancers had warned earlier this year that “unrealistic expectations” from customers about the stamp duty deadline were putting pressure on the mortgage sector.
Phil Leivesley, director of mortgages at LDN Finance, said that unlike previous stamp duty events, there was a “relatively calm lead-up to the most recent changes”.
He explained: “It wasn’t initially understood quite as well as it could have been how outsized the impact would be on first-time buyers, particularly those buying between £500,000 and £625,000, but I think conveyancers did a great job in prioritising these clients immediately prior to the deadline. On the whole, I’m not aware of many horror stories where chains have collapsed, and so a great deal of credit must be given to the solicitors.
“Activity levels for new purchase applications in the latter part of February and in March remained strong, with these buyers having no expectation that the transaction would complete before the deadline. And, for many, the increase taking effect today is £2,500, which is a rounding error compared with some of the [other] costs of moving.
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“The domestic economic outlook might not appear as bright as we would want, but participants in the UK housing market remain as resilient as they have shown themselves to be over the last few years and, barring further unhelpful interventions from the new occupant in the White House, the outlook for the near term is a positive one.”
Sonya Matharu-Coxill, founder and adviser at The Mortgage Atelier, said that in the lead-up to the stamp duty changes, there was “definitely a noticeable shift in pace”.
“Clients were keen to complete, and we saw a spike in enquiries almost immediately after the announcement. Thankfully, most of our clients met the deadline – and for those who didn’t, we’d already prepared for that outcome. I think that’s where planning with clients makes all the difference. Providing clear communication, honest timelines, and making sure everyone understands the process helps align expectations from the start. So while the changes have been disappointing, they haven’t derailed my clients.
“In terms of communication, I do think the updates were shared well publicly, but it’s also where brokers quietly step in. We’re often the first to raise a flag when something shifts. We don’t give legal advice, of course, but keeping clients informed and guiding them towards the right conversations? That’s a big part of what we do,” she noted.
Looking ahead, Matharu-Coxill said she didn’t think these changes would slow momentum, adding that it wasn’t what she was seeing on the ground.
“Most buyers (particularly those who’ve been waiting in the wings because of Covid, interest rates, or general uncertainty) are simply done waiting for ‘better times’ and are ready to act. There’s a quiet sense of resilience now. Less focus on timing things perfectly, and more of a feeling of: ‘It is what it is, let’s get on with it!’” she added.
Conveyancers have been ‘working all hours’ and more updates on horizon
Beth Rudolf, director of delivery at the Conveyancing Association, said conveyancers have been “working all hours to get as many cases completed before the end of March, and to ensure clients secured the lower rate of stamp duty”.
She continued: “We’ve heard that record numbers of cases were being completed prior to deadline, and a number of firms have given staff time off today in order to catch up on sleep. So, you can imagine the level of work that has gone into these cases in recent weeks.
“The focus now, of course, turns to the ways and means by which we can make this entire process much easier, less stressful, more certain and quicker, in order to provide savings right across the board for all stakeholders.”
Rudolf said that once Easter was “out of the way”, conveyancers will have “time to consider all the upcoming changes”.
From 6 April, property portals, along with estate agents, will have the legal obligation to ensure that material information is completed, with the Competition and Markets Authority being able to fine 10% of income up to £300,000 for those not complying under the Digital Markets, Competition and Consumers Act 2024.
There is also secondary legislation coming out of the Leasehold and Freehold Reform Act, and the Conveyancing Association would “continue to work towards these methods of improving the home buying and selling process for all stakeholders to benefit from”.
Industry calls for more government support post-stamp duty changes
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, said research with its prospective buyers found that nearly half said stamp duty changes would prevent them from buying a property in the next year.
Geddes continued: “It’s clear we need to pursue other avenues to get more aspiring homeowners into the market. As things stand, today’s relief removal could lead to house prices dropping as demand for properties falls, with an increasing number of first-time buyers priced out of the market.
“People’s borrowing abilities, goals, and lifestyles have evolved, yet our lending rules remain static, with many prospective buyers penalised by current stress testing and affordability criteria. From adjusting loan-to-income (LTI) caps to enhance borrowing power, to providing additional 95%-plus loan-to-value (LTV) lending to help those with smaller deposits, there are so many ways we can get more first-time buyers the helping hand they need to become homeowners.
“That being said, it was promising to see the Financial Conduct Authority (FCA) openly criticise lenders as being ‘too cautious’ when approving mortgages for first-time buyers. There’s already some level of flexibility with stress testing that isn’t being taken advantage of, and this was rightly called out. All eyes are now firmly on the lender community to take this on board, embracing innovation and a forward-thinking approach to get more first-time buyers on the property ladder.
“For those now looking to buy following the stamp duty deadline, there are still plenty of options available to get you mortgage ready, so don’t bury your head in the sand. Speak to an expert adviser, who can factor these changes into your existing budget and help you find a deal that aligns with your needs.”
Sebastian Murphy, group director at JLM Mortgage Services, said the level of first-time buyer activity has “dropped significantly” in the last 6-8 weeks as prospective purchasers realised they wouldn’t be able to complete before the stamp duty thresholds changed.
“Unfortunately, we don’t see that level of increased activity returning without further government intervention. For example, we have no replacement for Help to Buy, and it may well need some further form of stamp duty incentive specifically for first-timers to get them back to market.
“In a way, the lack of first-time buyer-focused incentives seems to go against what the government has been saying about wanting more first-time buyer activity, so it would surely be a good focus for the government to tell us what their game plan is going forward, especially if they want to fill all those homes they say they are going to build,” he added.
