First-time home buyers are facing significant delays in purchasing their homes, potentially leading to higher stamp duty costs before the deadline in April 2025. Currently, first-time buyers are exempt from paying stamp duty on properties up to £425,000, with a 5% tax on the portion above that up to £625,000. However, this threshold is set to decrease back to £300,000 next year, resulting in increased costs for buyers.
The delays in the housing market are attributed to various factors, including slower processes due to Covid, conveyancing issues, fragile chains, and cautious lenders. The extended timelines for completing home purchases have created challenges for buyers, especially those looking to take advantage of the stamp duty exemption before the deadline. Brokers emphasize the importance of starting the home buying process early to avoid missing out on the incentive.
Furthermore, the process of buying a home can vary in time, with new builds typically taking longer due to lender caution and potential delays in construction. Factors such as complex income sources, the choice of legal and broker firms, and relationships within the buying chain can also impact the timeline. While first-time buyers may have more flexibility in completing purchases faster due to lack of chain complications, proactive brokers with good relationships can expedite the process.
It is recommended that buyers do not rush into purchasing a home solely to meet the stamp duty deadline, as it is crucial to ensure the property is the right fit. Mortgage advisers can help assess the impact of stamp duty costs on deposits and provide guidance on making informed decisions. While having a mortgage offer in place early can help avoid delays, buyers should prioritize finding the right property over rushing the process.
In addition to navigating the stamp duty deadline, buyers should also consider securing the best mortgage deal possible. Factors such as deposit size, changes in loan-to-value ratio, credit score, and salary can influence mortgage rates. It is advised to compare different deals using mortgage comparison tools or seek assistance from mortgage brokers to find the most suitable option. By planning ahead and understanding the mortgage process, buyers can make informed decisions that align with their financial goals and circumstances.