Future homebuyers have just 12 months to avoid a hike in stamp duty that could cost them a substantial sum of money, Coventry Building Society has warned.
The lender explained that homebuyers currently pay stamp duty if their home costs more that £250,000 but, after March 31 2025, this minimum threshold will fall to £125,000.
This will take the tax bill on an average priced home in England from £2,428 to £4,928.
Coventry Building Society, head of intermediary relationships, Jonathan Stinton, warned: “In 12 months’ time people buying a home over £250,000 will suddenly have to pay an extra £2,500 in tax.
“Many new buyers will have to dip into their deposit and borrow more just to cover the tax on their home.
“It’s a double hit because this hike is not only going to add thousands of pounds to peoples’ tax bills next year, it’s also going to cost buyers thousands of pounds in extra interest over the life of their mortgage.
“Some buyers will still be paying for this tax hike decades down the line.”
The analysis said this would affect those buying their first home especially, as currently they pay stamp duty if their house costs more than £425,000 but this will fall to £300,000 in March 2025.
Coventry pointed out, as the average first time buyer home in London is £446,280, the stamp duty will shoot from £1,064 to £7,314.
Additionally, Stinton criticised the recent spring Budget for failing to bring any change on the subject of stamp duty, describing it as “a blow to homebuyers” as there was “so much more which could have been done” to make the tax better for everyone.
“The chancellor ignored this opportunity when he could have really got creative and introduced waivers for downsizers, incentivised energy efficient home improvements, or come up with fluid thresholds which move inline with inflation,” he added.
“Instead no substantial changes were made and the clock is ticking for future homebuyers.”
In February, homebuyers paid £781mn in stamp duty, making it a total of £1.6bn so far this year.
tom.dunstan@ft.com
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