First-time buyers will start paying stamp duty on the value of homes above £300,000 down from £425,000, from today.

As part of the changes, FTBs will pay 5% on the remainder, up to a maximum of £500,000 (down from £625,000), while other movers will see the nil-rate halve from £250,000 to £125,000. 

The stamp duty cuts were introduced in the September 2022 mini-Budget by Kwasi Kwarteng and were intended as permanent. 

However, two months later Jeremy Hunt announced that the measures would only remain in place until 31 March 2025. 

Leeds Building Society’s research found that an additional 21% of FTBs in England will face paying Stamp Duty as part of the changes.

The society found that an additional 59,400 annual home purchases are projected to become subject to the tax in England, alongside 43,000 purchases where taxes will be higher.

In the run up to 31 March, lender’s tried to implement ways to ease the financial impact on borrowers. One of those was Accord Mortgages, who launched a mortgage range to help cover the cost of buying a first home by offering first-time buyers up to £6,250 cashback.

Commenting on the changes today, Mortgage Advice Bureau strategic lender relationship director Rachel Geddes says: “With 41% of our prospective buyers stating that the latest Stamp Duty changes may prevent them from purchasing a property in the next 12 months, it’s clear we need to pursue other avenues to get more aspiring homeowners into the market.”

“As things stand, today’s relief removal could lead to house prices dropping as demand for properties falls, with an increasing number of first time buyers priced out of the market.   

“People’s borrowing abilities, goals, and lifestyles have evolved, yet our lending rules remain static, with many prospective buyers penalised by current stress testing and affordability criteria.”

“From adjusting LTI caps to enhance borrowing power, to providing additional 95%+ LTV lending to help those with smaller deposits, there are so many ways we can get more first time buyers the helping hand they need to become homeowners.”

“That being said, it was promising to see the FCA openly criticise lenders as being ‘too cautious’ when approving mortgages for first time buyers. There’s already some level of flexibility with stress testing that isn’t being taken advantage of, and this was rightly called out.”

“All eyes are now firmly on the lender community to take this on board, embracing innovation and a forward-thinking approach to get more first time buyers on the property ladder.”

“For those now looking to buy following the Stamp Duty deadline, there are still plenty of options available to get you mortgage ready, so don’t bury your head in the sand.”

“Speak to an expert adviser, who can factor these changes into your existing budget and help you find a deal that aligns with your needs.”

Elsewhere, Pepper Advantage UK managing director Aaron Milburn states: “Mortgage approvals dipped by 600 from January to 65,500 according to the latest figures released by the Bank of England.”

“The fall reflects a wariness over increasing costs, as buyers contemplate the rise in stamp duty set to take affect from today and the long-term impact of higher rates for longer weighing on monthly repayments.”

Propertymark NAEA president Toby Leek says many people would have completed the sale of their home yesterday to save potentially thousands of pounds from the measures that have kicked in today.

Leek explains: “Some will also be disappointed that they were unable to complete quickly enough to avoid paying extra Stamp Duty, leaving many with the extra burden to find on average an extra £2,500 in order to move home.”

“Moving forward, however, the extra cost may be adsorbed within the price of properties therefore raising the overall price marginally but remaining within affordable limits for many people especially given mortgage products coming to the market continue to improve, with sub 4% products now available.”

“As this improves this will hopefully continue to enable people to step onto the ladder for the first time or move home more freely as we move into the summer months, which is a traditionally busier time for the housing market and presents buyers and sellers with much more options.”

“For some though, home ownership aspirations are unrealistic and the growth in the amount of a deposit needed which is, on average, around £50,000 is too far out of reach.”

“Therefore, the UK Government needs to urgently review the Stamp Duty value bands to reflect average property prices and ensure any current or future measures to help first time buyers including saving ISAs are available, fit for purpose and consider house price inflation.”

Earlier today, the Nationwide house price index revealed that the annual rate of house price growth remained stable in March at 3.9%, unchanged from February.

Nationwide’s chief economist Robert Gardner says: “These price trends are unsurprising, given the end of the stamp duty holiday at the end of March (transactions associated with mortgage approvals made in March, especially toward the end of the month, would be unlikely to complete before the deadline).”