Taking your first step on the property ladder is a big deal, and it’s most likely the largest expense you’ve faced so far. But while the end goal of home ownership is exciting, the journey to secure the finances for a mortgage can be overwhelming if you don’t have the right support in place.
“There a numerous potential benefits of using a mortgage broker,” says Matthew Jeffery, a mortgage adviser at SPF Private Clients. “We have in-depth knowledge about the lenders, the available mortgage products and the latest rules and regulations that can help progress the process, particularly important for first-time buyers.”
And with major changes to stamp duty in England coming into effect on 1st of April 2025, first-time buyers face a crucial decision: rush to complete before the deadline or wait for potentially better conditions later in the year. But what’s really at stake, and what’s the best move in today’s market?
The current stamp duty relief has been a significant boost for first-time buyers, particularly in London where the Land Registry House Index shows the average price for a first-time buyer is £444,548. Until April, first-time buyers in England pay no stamp duty on properties up to £425,000 and just 5% on the amount between £425,000 and £625,000.
“I see a lot of properties with people offering the same amount because they simply can’t offer anymore – if they make an offer £1,000 above the threshold, it instantly adds an additional £8,800 to their stamp duty cost.” says Matthew. “You can have a lovely property that goes on for £625,000 and estate agents get inundated with four or five offers and guess what, everyone is limited to £625,000.”
How will stamp duty change for first-time buyers in April?
From 1st of April, the landscape changes dramatically. The relief threshold in England drops to £300,000 for first-time buyers, and there is no relief on purchases over £500,000 – a particular challenge in London where, as Matthew notes, “To even get on the property ladder for less than £500,000 is getting tougher and tougher.”
For those currently house-hunting, time is of the essence. “If you haven’t had an offer accepted now, you may struggle to complete the purchase before 1st April,” warns Matthew. “If you’re still negotiating or haven’t found somewhere, every day that goes past will add to the frustration.” The pressure isn’t just from the deadline however, it’s also coming from overwhelmed solicitors and lenders dealing with the rush to complete before the changes.
For those already in the process, working with the right professionals can make a crucial difference. For example, some lenders accept search indemnity insurance (which negates the need to wait for six to eight weeks for the property searches to be carried out); this can significantly speed up the completion process, which is particularly important with the end of March deadline looming.
Current market trends show first-time buyers adapting to challenging conditions. “A lot of them are trying to maximise their deposit as much as possible” says Matthew. Schemes such as the Lifetime ISA can assist with this, or research from Savills found that over half of first-time buyers got help from their parents when buying their first home.
This strategy makes sense given the interest rate disparities on loan to value ratios. “The pinch is felt most for people with small deposits – for loans that 90% of the property value, with a 10% deposit, the fixed interest rate is still around 5%. But for buyers that can put down a deposit of 25%, they could get a fixed rate below 4.5%”. (indicative rates correct at the time of production, and mortgage rates are subject to availability and personal circumstances).
Should you buy now or wait?
Looking beyond April, there could be some silver linings for first-time buyers with a slight adjustment in prices. “From 1st of April, you might not see much house price growth for a number of months because buyers will need to be making the stamp duty saving elsewhere. Their offers might be £615,000 rather than £625,000 because they’ve worked out they’ve got to pay £21,250 stamp duty rather than £10,000.”
So should first-time buyers rush to beat the deadline or wait? “Now could actually be a good time to buy because we’ve seen a couple of months of massive competition,” says Matthew. “Some people may be disheartened by the change, and it may mean properties become slightly cheaper than was previously the case. On the other hand, Bank of England interest rates are widely predicted to reduce over the coming months, which will hopefully lead to some reductions in mortgage rates. By that point, buyers will have got over the stamp duty change and accepted this new reality.”
However, Matthew emphasises that waiting for the perfect conditions might be counterproductive: “In an ideal world, interest rates would be low and house prices would be low, but that’s not how the housing market works.”
“In reality, you want to get on the property ladder at the point where house prices are potentially not as high as they’re going to be, and interest rates are potentially not as low as they’re going to be. You want to find that perfect equilibrium rather than waiting for rates to reduce to a certain level, as that may then bring more buyers into the market and cause house prices to increase.”
The message for first-time buyers is clear: while the stamp duty changes present challenges, the 1st April deadline shouldn’t be the only factor in your decision-making. Whether you decide to act now or wait, success in today’s market comes down to finding the right balance between deposit size, interest rates, and property prices – and being ready to move when you find that sweet spot.
If you would like to know more about how SPF Private Clients can help you as a first-time buyer you can contact us and speak to one of our team.