The Chancellor’s Budget: How it affects your house purchase

A Budget packed with announcements ranging from tax and spending to pay and pensions has been revealed by Chancellor Rachel Reeves.

Much of what was announced could affect you and your finances directly, as well as providing useful insights into what may lie ahead for those with mortgages and those looking to enter the housing market. So here's our interpretation of what it could mean for you.

Stamp duty threshold held until April 2025

For first-time buyers

First-time buyers can continue to take advantage of an elevated stamp duty threshold until April 2025, allowing them to avoid stamp duty on properties priced up to £425,000. After this date, however, the threshold will be reduced to £300,000 - meaning a reduction in stamp duty relief of £125,000.

This also means that starting in April 2025, first-time buyers will face a 5% stamp duty charge on the portion of their property’s value between £300,000 and £500,000, rather than the current value of between £425,000 and £625,000.

For home-movers

For those moving homes, the stamp duty threshold of £250,000 also remains in effect until April 2025. Currently homebuyers pay 5% on the portion of a property’s value above £250,000, up to £925,000.

However, in effect from April 2025, the threshold for home movers will decrease to £125,000. At that point, a 2% stamp duty will be required on the value between £125,000 and £250,000, reflecting the government’s new approach to stamp duty policy. For properties between £925,000 and £1.5 million, a 10% rate will apply, while properties exceeding £1.5 million will incur a 12% stamp duty on the portion above £1.5 million.

Stamp duty surcharge will hit landlords and potentially renters

For landlords and renters

Starting Thursday, the stamp duty on second homes, buy-to-let properties, residential purchases, and purchases made by companies in England and Northern Ireland will increase from 3% to 5%. This rise could have a significant impact on the rental market, as analysts suggest it may deter landlords from purchasing additional properties.

If fewer landlords invest in buy-to-let properties, there could be less supply of available rental homes, meaning a rise in demand from renters and therefore a potential increase in monthly rent, putting pressure on renters and stretching affordability.

What’s Next for Homeowners and Buyers?

For those with existing mortgages, especially those with variable or tracker rates, the budget’s implications on base rates will be particularly relevant.

Many homeowners are still experiencing elevated monthly payments compared to past years, and any reduction in the base rate could provide much-needed relief. Fixed-rate mortgage holders will not feel the effects immediately but will benefit once their fixed terms end if interest rates have maintained at a lower figure, or continued to decrease by then.

Our advice

Start your search

If you’re a first time buyer or home mover thinking of taking your next steps in the property market, now is the time to start your search. With stamp duty thresholds due to reduce in April, and the typical offer-to-completion time averaging 16 weeks, you’ll need to act fast to secure your dream home with the benefit of the current stamp duty rules.

Keep an eye on the market

Homeowners considering remortgaging should keep a close eye on the outcome of the budget and the Bank of England’s subsequent decisions. If the Bank signals intentions to cut rates following the budget, there may be increased competition among lenders, which could result in more favourable rates in the near term.

Consider your mortgage options

For those with existing mortgages, it may be wise for homeowners and buyers to carefully review their options with a mortgage advisor, despite the status of their current deal. With possible rate decreases on the horizon, remortgaging to secure more favourable terms sooner rather than later could help lock in longer-term savings, despite early repayment charges.

To book an appointment with one of our mortgage advisors, click here or call us on 0800 5053355.