Money Saving Expert Martin Lewis has issued a warning to first-time buyers, urging them to ‘act now’ to avoid extra expenses.
This month, The Martin Lewis Money Show returned to screens, which saw the money expert analyse the effects of the Autumn Budget on the property market. In the show, he encouraged first-time buyers to get on the property ladder before April, to avoid paying more in Stamp Duty Land Tax.
Stamp Duty is a tax paid by buyers on property purchasers over a certain amount.
However, following the Autumn Budget, the threshold is set to change – meaning you are taxed more and
Speaking on a Budget special Martin said:
“If you’re looking to buy now, you want to get it done before next April as it is going to get a lot more expensive.”
On the show, Martin said the biggest changes were to Stamp Duty on second homes, where the rate would increase from the current rate of 3% to 5% from October 31. However, Martin warned that there were further changes that would impact first-time buyers and were hidden in Budget documents.
He explained:
“In England and Northern Ireland, the Stamp Duty thresholds are to be cut on April 1, 2025 So why wasn’t it in the speech?
“Well, this is because the last government increased the threshold at which you pay Stamp Duty, and it was planned to come down if the Chancellor didn’t decide to continue the old thresholds. So in reality, Stamp Duty thresholds are coming down.”
At present, you pay no Stamp Duty on properties up to £250,000 – up from £125,000 before – and you pay 5% when it is over. This threshold will be reduced back down to £125,000 from next April.
First-time buyers
For first-time buyers, Martin says there are two changes which they should be aware of. First-time buyers are currently exempt from paying stamp duty on properties priced up to £425,000. If a property is more expensive they only pay tax at 5% on the portion above £425,000 and up to £625,000.
Martin said that like normal Stamp Duty, the lower limit for the first-time buyer Stamp Duty was temporarily increased in 2022, but the chancellor has now announced it will revert to £300,000 in April next year. The higher limit will also be dropping to £500,000 – so if you are buying a house above this level you will receive no first-time buyer relief.
He explained:
“Now, what that means in practice is for someone buying a property worth £425,000, you’re going to be paying an extra £6,250 in Stamp Duty from next April than you are right now. For someone buying a property over £625,00, you’re going to be paying an extra £11,250 pounds more in Stamp Duty.”
He again urged first-time buyers looking into getting on to the property ladder to consider trying to get their deal done before next April, as it is set to get more expensive. He added: “I know it’s not what you want to hear, but you need to understand what’s going to happen.”
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
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