Hundreds of thousands of homebuyers are scrambling to complete their purchases before a looming stamp duty hike leaves them with unexpected bills of up to £11,250.
A new report by Rightmove has revealed that 550,000 property sales are currently stuck in limbo, a 25% increase compared to last year, as soaring demand and a backlog in processing threaten to derail transactions.
The rush comes ahead of an April 1 tax hike, when Chancellor Rachel Reeves’s changes to stamp duty will slash the threshold at which first-time buyers pay the levy from £425,000 to £300,000.
The maximum property price eligible for stamp duty relief is also being cut from £625,000 to £500,000, leaving buyers of properties in the £500,001-£625,000 bracket facing a hefty £11,250 tax bill.
Buyers of second homes will also be hit hard, with the threshold for their stamp duty liability slashed to just £125,000.
Marc von Grundherr, director of estate agents Benham and Reeves, warned: “The average London first-time buyer is set to see the stamp duty owed on their purchase increase by around £6,000-£10,000, so it’s a considerable increase in cost. There has been some further negotiation with respect to offers submitted to try and alleviate the increase in stamp duty costs incurred, but the vast majority of buyers are proceeding as planned.”
Andrew Tucker, of agency Bidwells, said: “Many will have been rushing to get deals over the line before the rise in stamp duty comes into effect this spring. There remains a stark supply and demand imbalance in housing which will keep prices high, while household earnings continue to outpace inflation which should prop up demand.”
Meanwhile, a spokesman for the Society of Licensed Conveyancers assured buyers that legal professionals were working to prevent deals from falling through. “Over recent years conveyancers have been able to overcome other stamp duty deadlines, whilst maintaining high standards and consumer satisfaction,” they said.
The stamp duty shake-up comes just as ministers announce plans to digitise and simplify the house-buying process, in a bid to tackle Britain’s sluggish property market. One in three transactions currently collapse, costing buyers and sellers a staggering £400m a year.
Housing Minister Matthew Pennycook said: “We are streamlining the cumbersome home-buying process so that it is fit for the 21st century, helping homebuyers save money, gain time and reduce stress while also cutting the number of house sales that fall through.”
With just weeks to go before the new rules come into effect, the race is on for buyers desperate to avoid a punishing tax bill.
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