THOUSANDS of first-time buyers have just days left to get their purchase agreed or face being slapped with a £7,500 stamp duty bill.
Currently, first-time buyers do not have to pay stamp duty on the first £425,000 of a property purchase.
But from April the threshold beyond which they must pay the tax will plummet to £300,000.
Meanwhile, home movers currently only pay land tax on purchases worth £250,000 or more.
This threshold will be slashed to £125,000 for owners who want to move up the ladder.
The changes are forecast to drag approximately 310,000 more homebuyers in England into paying stamp duty each year, according to Estate Agent Hamptons.
It could add thousands of pounds to the total cost of buying a home.
For instance, a first-time buyer who purchases a property worth £425,000 today does not need to pay any stamp duty.
But their property tax bill could rise to £7,500 from April.
If the same buyer was to purchase a home worth £325,000 then they would need to hand over £1,250 in stamp duty.
As a result, many first-time buyers are “making a dash for the finish line” said Aneisha Beveridge, head of research at Hamptons.
She said: “We have seen a particular uptick in purchases over £425,000, where new buyers face the biggest tax bill hikes.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”The Sun’s James Flanders explains how to find the best deal on your mortgage ” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6346355716112″ video_ids=”” width=”640px”]“With completion times averaging around four months, many of those agreeing sales now find themselves cutting it fine.
The next few weeks will be crucial for those hoping to avoid higher stamp duty bills.”
Buyers who want to complete their purchase before the deadline need to act fast as time is running out.
It takes an average of 126 days between a sale being agreed and completion.
[boxout headline=”How much extra would I need to pay?” intro=”First-time buyers currently do not pay stamp duty on the first £425,000 of their property’s value.”]Beyond that stamp duty is charged at 5% on the portion from £425,001 to £625,000.
But from April 1 the threshold at which you pay stamp duty will be cut to £300,000.
Beyond that you will pay 5% stamp duty on the portion from £300,001 to £500,000.
If the price is over £500,000, you canot claim the relief.
A first-time buyer who is buying a home worth £325,000 would pay £1,250 in stamp duty from April 1.
If the same homeowner instead purchases a property worth £350,000 then their bill would rise to £2,500.
Those with a bigger budget who want to buy a house worth £400,000 would need to hand over £5,000 in stamp duty after March 31.
Or if their dream home is worth £450,000 then their bill would rise to an eye-watering £7,500.
All of these buyers would pay no stamp duty if they complete their sale before March 31.
Only around 29% of sales agreed complete within three months.
But that figure falls to 13% within two months and just 6% in one month.
Andrew Montlake, managing director at mortgage broker Coreco, warns that first-time buyers need to act now if they want to meet the deadline.
He said: “In reality, it really is the last couple of weeks to get a purchase agreed if you want to be in with a chance of making the deadline.”
[authenticated-scripts src=”%3Cscript%20class%3D%22palin-poll%22%20src%3D%22https%3A%2F%2Fwww.thesun.co.uk%2Fpollingwidgets%2Fv3%2Fwidget.js%3Fquestion_id%3D104267%26game%3Dpolling%22%3E%3C%2Fscript%3E” type=”embedded” width=”100″ /]Some homeowners have already sprung into action.
The proportion of homes which were bought by first-time buyers across Great Britain hit a record high in the last two months of the year.
First-time buyers purchased 31.8% of homes in the country in November and December, the highest figure on record.
Yorkshire and the Humber saw the biggest rise in the proportion of homes bought by a first-time buyer.
Over the course of last year around 28% of homes were purchased by a first-time homeowner.
But this number soared to 32% in November and December.
Meanwhile, in London nearly half of homes sold in the last two months of the year were purchased by first-time buyers – the highest share in the country.
Around 69% of these buyers bought a home which cost more than £300,000.
This means they are set to save money if they can complete their purchase by the deadline.
Buyers in London and the South East will be some of the worst affected by the stamp duty changes as property prices are much higher in these regions.
A typical home in the UK cost £268,518, according to Nationwide Building Society.
But an average home in the Capital would set you back £525,535 – nearly double the national average.
Meanwhile, a similar property in the South East would set you back £336,224 – £67,706 more than the national average.
How to complete your purchase before the deadline
David Hollingworth, associate director of mortgage broker London & Country, said keeping on top of things that you can control can help you to get your purchase over the line.
He said: “Being super prompt with any document requests from your lender and solicitor will help ensure that you aren’t building in any avoidable delay.
“That will help if you need to put some pressure on your buyer to speed the process up but of course, a lot will depend on the length of the chain as to what can be achieved.”
Do not wait for updates from your mortgage broker and estate agent.
Instead, check in with them every couple of days and ask for regular updates on any paperwork you need to complete.
Different parts of the buying process can vary in how long they may take, property portal Zoopla warns.
Examples of this could include:
- Securing a mortgage – two to four weeks
- Making an offer – one week
- Instructing a conveyancer – six weeks to three months
- Getting a survey done – one week
- Exchanging contracts and completing the purchase – one day to two weeks
You should set a target for exchanging contracts so that everyone in the process has the same deadline to work towards.