We waited until after 12:00 noon, just in case this has all been some sort of elaborate April Fool’s Day prank; but – writing as I am on April 1st 2025 – it does seem that today really is the day that Stamp Duty increases…
Or that is the Headline, at least – and that is what most Estate Agents and commentators seem to be saying.
But actually, the truth of it is not quite so straight forward…
In today’s blog, I break down the news of today’s Stamp Duty increase, discuss whether it is truly the ‘increase’ that headlines would have us accept it is and, most importantly of all, I explore what it all means for property buyers in Herne Hill.
A Busy First Quarter for Property Sales in SE24
Like many Estate Agents, our Petermans Estate Agents Herne Hill branch has been busy, as we have pushed to get as many sales as we could over the line in time for today’s change – and we had three go right to the wire, managing to complete all three yesterday, saving those buyers thousands of pounds in Stamp Duty.
But it wasn’t all about yesterday, or the last week, or even the last month.
Since the Autumn Budget, there has been a groundswell of activity setting the market up for a busy first quarter, and the SE24 property market has been no exception.
Property ‘sold’ prices, a typical weather gauge for the health of the property market – although I would argue, not the most reliable – are slightly down year on year, according to Rightmove, although only down by around the 1% mark.
This puts the average house price in SE24 at just over £892,000, although that single figure can be somewhat misleading, as it really does depend on the type of property we are talking about.
Here is how local property prices break down:
- Flats – £544,132
- Terraced Homes – £1,092,597
- Semi-Detached Homes – £1,660,879
For Detached Homes the data is more limited, but if you do own a property in SE24, it might also be useful to know that the property data site Housemetric records the median average value to be £8,900 per square metre – and if you own a detached house, it is probably not unreasonable to assume that your value per square metre falls above that median average (of course, if you would like to know your home’s value, click here).
Nevertheless, I mentioned earlier that property prices in themselves are not necessarily the best weather gauge; what better hints at a healthy market is activity – i.e. demand and transaction numbers.
For Herne Hill property owners, I am pleased to say that both things are up over the first three months of 2025 – and of course that will be in no small part down to buyers being keen to save a bit of money on their stamp duty by pushing sales through by the end of March, rather than in April. Demand is up by around 10% year on year, with property transactions up by around 5%.
This is usually a positive sign heading into the busier Spring market – but what can we expect from the second Quarter, heading into the Summer?
How has Stamp Duty Changed from April 1st, 2025?
I mentioned right at the beginning of this article that whilst the headlines will tell us that Stamp Duty has increased, the reality is a little more nuanced.
People (and mainly Estate Agents and Property Commentators!) will say that a Stamp Duty increase was announced in Rachel Reeves’ autumn budget, to kick in today, April 1, 2025.
In fact, on this occasion, Reeves’ budget in itself wasn’t to blame.
Actually, Stamp Duty was reduced after Kwasi Kwarteng’s so-called ‘Mini-Budget’ of September 2022. The lower threshold was removed, meaning that (other than second home buyers) no stamp duty was payable on any purchase amount between £125,000 and £250,000 – immediately saving buyers £2,500 on any purchase above £250,000.
The thing is, this was only a temporary measure.
It was always scheduled to revert to normal on April 1st, 2025. Rachel Reeves didn’t schedule an increase in Stamp Duty in her October Budget Announcement per se; she simply didn’t use the opportunity to extend the holiday or reform the tax.
So, this isn’t exactly a tax that has increased – it is a holiday that has ended. Which means, when you think about it, it is only what the market had to put with before September 2022 – and if you can remember the 2021 market, which was fast and furious, you can see that this returning level of stamp duty is not a price that people aren’t willing to pay. People may grumble, and of course we want to see people save as much money as possible, hence our drive to close off sales yesterday where we could – but ultimately it probably won’t have a lasting impact (although we may see some – more on that, in a moment).
The First Time Buyer Challenge
First Time Buyers had also been given a Stamp Duty Holiday. In their case, this had meant zero Stamp Duty paid up to a £425,000 amount, with 5% of the property value above that amount being paid as Stamp Duty (as long as the sale were below £625,000… sorry, complicated I know. Think how we feel! But also, lodge this little titbit for a few paragraphs time…).
Today, that 0% threshold drops from £425,000 to £300,000 for first time buyers, and that ‘relief’ threshold drops from £625,000 to £500,000.
This change is likely to matter more to the market, as in a healthy market we need first time buyers buying.
Not sure what I mean? Let me put the First-Time Buyer problem into context:
Yesterday, a first-time buyer purchasing a property in Herne Hill at £425,000 would have paid zero stamp duty.
Now, we know it is not so easy to find properties in Herne Hill at £425,000 or below, so let’s also look at a first-time buyer purchasing a property at the average value for flats here, which as mentioned earlier is £544,000…. Hey, let’s call it £525,000 for easier maths. That buyer would have paid zero stamp up to the £425,000 amount, and then 5% of the value between £425,000 and £525,000 – i.e. 5% of £100,000, being £5,000 total stamp duty.
From today, April 1, 2025, a first-time buyer purchasing at £425,000, who would have paid zero stamp duty yesterday, would pay 5% of the value between £300,000 and £425,000, i.e. £6,250.
So that is an extra £6,250 of purchasing costs for the first time buyer at £425,000 who didn’t manage to get their purchase through by March 31. That is a tougher break than the standard buyer is suffering, who I mentioned earlier will from today pay an extra £2,500.
But let us not forget our second example – our First Time Buyer purchasing their £525,000 flat in Herne Hill…. £5,000 Stamp Duty on March 31st, but from April 1 that becomes subject to full Stamp Duty, with no First Time Buyer Relief at all, because the Relief Threshold has dropped from £625,000 to £500,000.
This would mean that First Time Buyer’s stamp duty increasing from the £5,000 it would have been in March 2025, to £16,250.
And that is quite a jump.
The reason this matters to the Herne Hill market is that most of our First Time Buyers will be getting hit by this level of Stamp Duty, given our average house prices. And whilst some people will argue that it’s only fair, we do have to appreciate that without First Time Buyers, the rest of the market struggles to move forward.
What will this all mean for the Herne Hill Property Market in 2025?
The wider effect of increased (or, as it were, reverting!) Stamp Duty from April 1 remains to be seen.
There is clearly going to be some difficulty for First Time Buyers in Herne Hill and much of the surrounding area – especially on purchases above £500,000. We will probably see First Time Buyers being more stubborn with the offers they make, trying to pin their top price at £525,000… a seller may want £510,000, but to the First Time Buyer buying it that is not a £10,000 increase, it is a £21,000 increase when Stamp is factored in.
I am not saying this is right or wrong, I am saying it is what it is, and we have to be prepared for that.
Generally speaking, however, I am more optimistic. The groundswell of activity going into the end of March and taking us through into this second quarter has come at the right time – just as the weather is getting warmer, the clocks have gone forward, and mortgage rates have just started to edge downward – so hopefully the busier, more buoyant Spring market will carry that wave of burgeoning market optimism forward.
What matters to us, with my Estate Agent hat on, is that we have buyers registered who want to buy somewhere to live – including First Time Buyers looking for their first home.
And where there’s will, there is always a way.