Stamp Duty Costs and the Residential Property Market 2025

As we look at the year to come we see a range of factors that will influence the residential property market. One of the more immediate ones is that at the end of March 2025 many buyers will see a lift in Stamp Duty on property purchases. This is driving something of a boom in property transactions.
At present people buying a home for less than £250,000 do not pay Stamp Duty. This will change at the end of March, reverting to the previous level of £125,000. For first time buyers the limit is currently £425,000 but this will revert to the previous level of £300,000.
The Government also announced that people buying a second home would see the extra stamp duty rise from an additional 3% to 5%.
But what of the rest of the year? The year ahead is perhaps one of the most difficult property markets to predict, with contradictory forces at play.
The outlook predicting a sustained drop in interest rates has changed. The recent announcement of a steady rise in UK Government borrowing could also influence interest rates in 2025. We also have some suggestions that tariffs around the world could be raised, which could walk up inflation in the UK given we tend to import many of the products we consume. This might prompt the Bank of England to hold interest rates to help control inflation.
Balancing that we’ve seen some people holding back on moving house, waiting for interest rates to drop but who will need to make a move in the coming year. As such there is some pent-up demand in the property market.
We also anticipate further changes to the rental market. Some smaller landlords have been exiting the market with concerns about changes to regulations and higher borrowing costs. This has reduced the rental stock, which in turn has pushed up rental prices. This is likely to endure given there is no immediate source of additional rental stock. These higher rental prices might encourage some tenants to look at buying a property given monthly borrowing costs can be lower than tenancy charges stoking activity in the property market in general.
As ever in residential property trying to match a house move with a perfect market is probably unrealistic. The prime drivers of location, affordability, personal circumstances etc. should drive sentiment.
So what does this mean for house prices? Many have been forecasting a modest increase in prices. Our view is that prices will vary by location and the size of property and that there will be some well-priced properties coming onto the market in 2025.
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