Coventry Building Society is urging for stamp duty to be on the cards ahead of the next Budget as the average homebuyer is set to be hit with extra £5,000 tax bill.
With Labour returning to power, the building society is reminding Prime Minister Keir Starmer to tackle the issue before a change to tax thresholds.
In 2024, homebuyers in the UK have paid £5.4billion in stamp duty which is roughly the same amount paid last year.
Those buying property currently pay the tax if their homes cost more than £250,000 but this threshold is going to plummet to £125,000.
This will take the tax on the average home in England from £2,619 to £5,119.
First time buyers currently pay stamp duty if their home costs more than £425,000, which is set to drop to £300,000 in March 2025.
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The building society is sounding the alarm about pending changes to tax
ALAMY
Stamp duty is a tax Britons occasionally are charged when buying a residential property or piece of land in England which is above £250,000.
However, the rate at which they are taxed is different if they are a first-time buyer as they qualify for relief.
From next year, the rates and relief available for homeowners and first-time buyers will be different.
As a consequence of this, more people are expected to be liable to to pay stamp duty unless action is taken.
Jonathan Stinton, the head of Mortgage Relations at Coventry Building Society, called on the new Labour Government to take action as soon as feasibly possible to help buyers.
He explained: “The new Government has been fairly mute on stamp duty so far, but silence definitely isn’t golden when it could end up costing homebuyers thousands of pounds in extra tax.
“If we don’t hear anything between now and next April those looking to buy an average-priced home will have to fork out an additional £2,500 in property tax.”
This hiked tax bill comes as 1.5 million homeowners are expected to come out of their fixed rate deal by the end of the year as interest rates remain relatively high.
According to Stinton, the next Budget from the new Government could be announced as soon September with there being only eight months until temporary thresholds for property tax will halve to only £125,000.
Once this is implemented, the majority of new homebuyers are likely to be struck by bigger up-front tax bills.
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The mortgage expert shared a prediction as to how the property market will likely evolve in the months ahead which could further incentivise the need for reform.
“Within the next few months, buyers will be increasingly likely to rush through purchases to avoid a hefty tax hike, causing a flurry of activity followed by a sharp drop after the relief has ended.
“This swell and burst effect isn’t going to help build long term stability in the market, so Stamp Duty should be high on the Chancellor’s priority list when preparing for the next Budget.”
Chancellor Rachel Reeves has not yet set a date for when the next Autumn Budget for this year will take place.
