London faces UK’s worst home sales logjam before stamp duty hike
Rightmove expects the capital will see “the biggest logjam of first-time buyers trying to complete before March”
LONDON faces the biggest bottlenecks of house sales in the UK as buyers and sellers rush to complete deals before a property tax increase comes into force, Rightmove said.
The number of first-time buyers trying to tie up transactions in the capital is almost a third higher than at the same time last year, the property website said on Monday (Feb 17). Those looking to get onto the property ladder are scrambling to complete deals by April, when the price threshold at which the stamp duty levy becomes payable is due to be lowered.
“For those in higher-priced areas of England such as London, the additional stamp duty charges they face can be significant and difficult to afford,” Colleen Babcock, a property expert at Rightmove, said. “The lengthy and frustrating completion process means that the average mover has had to have one eye on the clock since November to ensure that they complete before the stamp duty deadline.”
Current rules relieve homebuyers from paying stamp duty on the first £425,000 (S$716,484) of a purchase. On Apr 1, that threshold will be lowered across the board, with new bands of the tax introduced. In London, first-time buyers could see their stamp duty charges increase by as much as £10,000 as a result, according to Marc von Grundherr, director of Benham and Reeves in London.
Rightmove expects the capital will see “the biggest logjam of first-time buyers trying to complete before March”. The backlog extends beyond the UK capital. Nationwide, there are over half a million home sales going through the completion process, a 25 per cent increase from February 2024, Rightmove said, a sign that some will struggle to meet the deadline.
The lengthy homebuying process does not help. Transactions take an average of five months due to requirements for document exchanges and property and identity checks between mortgage providers and others.
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In a bid to speed the process up, the Labour government announced plans last week to use digital identity verification and data-sharing. That’s part of Prime Minister Keir Starmer’s ambitious plans to make housing more affordable by building 1.5 million new homes by mid-2029.
Even without the stamp duty increase, homebuyer ability to afford price rises remains stretched. Households face renewed pressures from rising food and energy costs, as well as growing fears of job losses as firms start passing through the government’s upcoming increase in employment costs.
After rushing to market in record numbers at the start of the year, home sellers are now having to offer discounts to attract buyers. The price of new UK homes for sale rose just 0.5 per cent in February to £367,994, Rightmove said, below the 0.8 per cent increase typically seen at this time of year.
Prospective buyers are also supported by easing borrowing costs. Lenders have started providing more competitive offers after the Bank of England cut interest rates by 25 basis points to 4.5 per cent on Feb 6.
“We hope this is the beginning of a sustained period of rates slowly heading downwards, and while we are unlikely to see major falls across the board, we have already seen the first sub-4 per cent rates of 2025,” said Matt Smith, mortgage expert at Rightmove. BLOOMBERG
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