First-Time Buyers Face £11,250 Tax Blow as Labour’s Stamp Duty Deadline Looms
February 12, 2025
120,000 UK homebuyers face unwanted tax bill ahead of Labour’s April stamp duty changes
According to data from TwentyCi data, more than 120,000 homebuyers are at risk of unexpected stamp duty bills as they scramble to complete purchases before Labour’s planned stamp duty changes take effect on 1 April. A third of buyers who have had offers accepted are unlikely to meet the deadline, leaving them facing additional costs of up to £2,500. In response, David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading stamp duty advisory firm, calls on the government to abandon its stamp duty reforms and focus instead on tackling the broader housing affordability crisis, which continue to put immense pressure on the housing market.
First-time buyers are also facing a serious financial setback, with three-quarters of the 12,000 currently in the pipeline at risk of paying up to £11,250 extra in tax if they fail to complete before the deadline. The looming cut-off is, therefore, putting an immense strain on the housing market, overwhelming conveyancers and estate agents with urgent requests to fast-track transactions. With the average home sale in the UK taking 136 days to complete, many buyers who believed they were on track now face the prospect of missing the deadline and being hit by Labour’s tax hike. David warns that this could trigger widespread fall-throughs and price renegotiations, further destabilising the market.
While Labour claims these reforms will improve affordability, David argues they will instead place an even greater financial strain on aspiring homeowners at a time of high interest rates and economic uncertainty. Rather than making homeownership more accessible, these policies risk pushing it even further out of reach. David also highlights that the UK government has missed key opportunities to tackle the country’s growing housing crisis. These include failing to raise the second home surcharge to 5% and not reinstating Multiple Dwellings Relief. Exclusive data from Cornerstone Tax further underscores the impact of these stamp duty reforms, revealing that 26% of Brits already aren’t unable to purchase property due to unaffordable stamp duty costs. Meanwhile, 15% of landlords are considering selling due to rising expenses, and 18% of prospective buy-to-let investors have been deterred by increasingly complex regulations.
Group Chairman of Cornerstone Tax, David Hannah comments:
“This year, the governmentmust urgently recognise the ever-pressing need for drastic changes to the housing market. The previous government’s decision to abolish Multiple Dwellings Relief (MDR) was beyond counterproductive and will result in fewer new homes being built, with a significant drop in both domestic and overseas investment into housing delivery.
“By removing a critical tax break such as MDR,the government’s refusal to reverse this policy undermines the build-to-rent sector, which relies heavily on such incentives to maintain and expand the housing supply. Furthermore, the increase in the second home surcharge and Stamp Duty thresholds reforms will not only reduce the stock of homes in the UK, but will make it harder for first-time buyers to get onto the property ladder.
“New policies need to promote affordability, accessibility and support for businesses building in Britain.Thegovernmentmust now listen to property firms and industry stakeholders to solve this vitally discouraging situation for Brits, otherwise this crisis will continue to cause chaos for years to come.”
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