We’re moving ever closer to the 2024 general election, and as part of our coverage we’re keeping a very close eye on the housing policies of the major political parties.
At the time of publication, the Conservative party is expected to pledge a permanent scrapping of stamp duty for first-time buyers who are purchasing a property that costs up to £425,000.
Meanwhile, the Labour party is yet to announce its manifesto. But we'll update you as we know more.
What we do know is that Keir Starmer has said Labour are are planning to make the mortgage guarantee scheme permanent to help people with small deposits step onto the housing ladder, rebranding it ‘Freedom to Buy’.
And that Labour believe the plan could help 80,000 more young people onto the housing ladder over the next five years.
But for now, let’s look in depth at stamp duty: where the thresholds sit currently, who would benefit if those thresholds were made permanent, and what lower thresholds mean for first-time buyers - no matter which party is in government.
What is stamp duty?
Stamp duty land tax, or SDLT, is a tax you pay when you buy a property or land in England and Northern Ireland.
The amount you pay changes depending on the price of the property.
As it stands, first-time buyers do not have to pay any stamp duty on properties that cost up to £425,000. And they only have to pay partial stamp duty for homes up to £625,000.
There is no stamp duty relief in Wales and Scotland because property prices are lower, and most first-time buyers pay a very low or no amount due to the way tax is set in these countries.
Everything you need to know about stamp duty.
Who will benefit the most from the stamp duty threshold staying at £425k?
We took a look at what properties first-time buyers are looking to purchase on Zoopla, and found that 8 of 10 would continue to not pay stamp duty if the current threshold was made permanent.
This would be particularly beneficial for first-buyers in London and southern England, where up to half are looking to buy homes priced between £250,000 and £425,000.
It’s worth noting that even if the £425k was made permanent, 7% of first-time buyers would still have to pay full stamp duty (most of whom are looking in London) and 15% would pay partial stamp duty.
Data from HMRC shows that across 2022 and 2023, over 203,000 first-time buyers in England claimed relief from stamp duty with savings of £708 million, or an average £3,500 per purchase. Of these 203,000, 150,000 paid no stamp duty at all, while 53,000 had to pay partial stamp duty.
Ready to find your dream home?
Search more than half a million properties for sale, from brand new homes to period homes.
What were the previous thresholds for stamp duty?
Prior to the mini budget in 2022, the threshold for first-time buyers not paying stamp duty was on properties that cost up to £300,000. And for partial stamp duty, it was up to £500,000.
The stamp duty tax relief that saw these thresholds raised to £425,000 and £625,000, respectively, was only supposed to be in place until 2025.
Why would a lower threshold for stamp duty cause problems for first-time buyers?
The main challenge for first-time buyers is needing to pass mortgage affordability tests and afford higher mortgage rates. For many, this means injecting more equity (i.e. a larger deposit) into home purchases to reduce the level of income needed to buy. A relief from stamp duty can help towards this.
A return to the old rules and price thresholds would see 30% of first-time buyers paying stamp duty once again, meaning less cash that they can directly put toward their deposit or other buying costs.
This would largely impact buyers across southern England where house prices are highest and average deposits are over £60,000.
