Why First-Time Buyers Should Act Now to Benefit from Current SDLT Thresholds

With changes to the Stamp Duty Land Tax (SDLT) thresholds on the horizon, now could be a crucial time for first-time buyers to consider their property options. The current SDLT relief, which offers significant savings on properties up to £425,000, is set to change in April 2025. Here’s why it might make sense to act now—and how these upcoming changes could impact your budget.

DALL·E 2024-11-05 11.58.13 - A modern UK home with a welcoming entrance and clean, brickwork exterior, set in a quiet neighbourhood with autumn leaves

What Is Stamp Duty Land Tax (SDLT) and Why Does It Matter?

Stamp Duty Land Tax is a tax that homebuyers in England and Northern Ireland pay when purchasing a property. Currently, first-time buyers benefit from a generous SDLT relief, avoiding stamp duty on properties valued up to £425,000. This relief helps many first-time buyers save thousands, making homeownership more accessible.

However, these relief thresholds are scheduled to decrease from April 2025:

General SDLT nil-rate threshold: Currently at £250,000, will reduce to £125,000.
First-time buyer threshold: Currently at £425,000, will drop to £300,000.

If you’re a first-time buyer, moving forward with a property purchase before April 2025 could mean substantial savings.

How Much Could You Save by Buying Now?

Let’s say you’re purchasing a property valued at £400,000:

Under current rules: You’d pay no SDLT, as it falls under the £425,000 threshold.
After April 2025: You’d need to pay SDLT on the portion above £300,000, which could add up to £5,000 to your costs.

If your budget is already stretched, this additional cost could affect your purchasing power, making it harder to get the home you want or limiting your funds for moving expenses and renovations.

Why SDLT Relief Changes Could Affect Your Buying Power

The decrease in SDLT relief thresholds might put added financial pressure on first-time buyers. Here’s how:

Higher Upfront Costs: The added SDLT cost could increase the amount you need to save before buying, making it harder to get on the property ladder.
Impact on Loan Affordability: Lenders consider all upfront costs when evaluating mortgage applications. Higher SDLT bills may reduce the amount you can borrow, affecting the types of properties you can consider.
Competition in the Market: Anticipating these changes, more buyers might rush to purchase before the April 2025 deadline. This could create competition in the market, potentially driving up property prices in popular areas.

What Should First-Time Buyers Do Now?

If you’re considering buying a home within the next year, it could be beneficial to start planning your purchase sooner rather than later. Here are some steps to get started:

Assess Your Financial Readiness: Look at your savings, income, and credit score to ensure you’re prepared for a mortgage application.
Set Your Budget and Begin Searching: With property prices potentially increasing as the April 2025 deadline approaches, starting your property search early can give you a better chance to find a home within your budget.
Work with a Mortgage Advisor: A mortgage advisor can help you understand the best mortgage options available and clarify how these SDLT changes could affect your specific situation. They can also assist with securing a competitive interest rate, which could further ease the financial impact of buying.

Get Expert Advice and Plan for the Future with RS-Financial

Timing can make a significant difference in the property market, especially with changing SDLT thresholds. At RS-Financial, we specialise in helping first-time buyers navigate the complexities of the mortgage process, from budgeting to finalising your loan. If you’re unsure how the SDLT changes might affect your plans, our advisors are here to provide guidance every step of the way.

Ready to take the next step? Contact RS-Financial today to explore your options and make the most of your buying power before the 2025 SDLT changes take effect.

By acting now, first-time buyers can position themselves to maximise SDLT relief and potentially save thousands. If you’re thinking about buying your first home, now is a great time to consider the financial advantages of moving forward sooner rather than later.