Published: 16/01/2025
New data analysed by Mount & Minster estate agents and applied to properties for sale in Lincolnshire, Nottinghamshire and Leicestershire indicates that the proportion of homes purchased by first-time buyers throughout the East Midlands reached an unprecedented 32.1% in 2024, with figures climbing further to 32.9% in the months of November and December.
According to Ralph Wyrley-Birch, Senior Partner at Mount & Minster, this surge is largely attributed to the forthcoming reduction in the Stamp Duty threshold, which was announced in the Autumn Budget.
From April 2025, first-time buyers will see the Stamp Duty exemption threshold drop from £425,000 to £300,000. The policy shift has triggered a notable increase in purchasing activity, particularly among those acquiring higher-priced properties, the area of expertise for Mount & Minster. This shift is expected to dramatically alter the landscape of first-time buyer tax liabilities.
The reduction in the Stamp Duty threshold will result in a more than threefold increase in the proportion of first-time buyers who will be liable for Stamp Duty, rising from 8% to 26%. In real terms, this could mean an additional £11,250 in tax for individuals purchasing homes valued at £625,000—a segment of the market that will experience the most significant tax hikes.
Notably, first-time buyers accounted for a record 20.8% of properties sold nationally for £425,000 or more during November and December 2024—an increase from 17.5% for the entirety of the year, and up from 14.5% in 2023. Furthermore, in the final months of 2024, 10% of first-time buyers paid over £425,000 for their home, compared to just 8% throughout the previous year. This uptick reflects a heightened awareness of the impending tax burden, driving many buyers to finalise transactions before the new rules take effect.
Mr Wyrley-Birch comments: "There were undoubtedly strategic purchases in the final quarter of 2024, with strong offers being made that would save proactive buyers thousands of pounds. Our data further highlights a shift in purchasing patterns, with a decline in the proportion of first-time buyers opting for properties valued under £300,000. The share of these lower-cost purchases fell to 34% in the final quarter of 2024, down from just under 35% for the full year. In contrast, first-time buyers purchasing homes above the £425,000 threshold have become more prominent, as they aim to mitigate the impact of the increased Stamp Duty rates expected in April. A lot of these buyers are relocating from London due to our relatively good-value properties and superb transport links."
He goes on to explain: "These trends signal an urgent scramble as first-time buyers rush to secure properties before the tax increase. With the conveyancing process typically averaging around three months, many buyers who have agreed on sales now find themselves in a race against time."
The timing of property completions will be crucial for those hoping to avoid higher tax liabilities. Buyers of freehold properties may have a better chance of completing their transactions before the March deadline, as the conveyancing process for leasehold properties often takes longer due to additional complexities. As a result, the next few weeks will be vital for first-time buyers seeking to lock in their purchases ahead of the Stamp Duty changes.