As the UK housing market braces for the upcoming stamp duty deadline on 31 March 2025, the first-time buyer (FTB) community is witnessing both challenges and opportunities.
Modest house price inflation, coupled with strong wage growth, has marginally improved affordability.
However, changes in stamp duty thresholds – which see the tax-exempt ceiling for FTBs drop from £425,000 to £300,000 and for other buyers from £250,000 to £125,000 – are set to exert significant pressure on buyers, lenders, surveyors, and conveyancers, particularly in higher-priced regions of England.
Affordability for first-time buyers
Recent affordability data from Halifax highlights modest house price inflation of 3.8% over the past year, with average prices now at £292,508.
Concurrently, annual full-time earnings have risen by 5% to £44,667. This has reduced the house price-to-income ratio to 6.55, down from a peak of 7.24 in 2022 and means affordability has improved for FTBs.
While these figures are encouraging, regional disparities persist. Higher-priced areas like London, the South East and the East of England face unique challenges, with fewer properties falling under the revised £300,000 stamp duty threshold for FTBs.
For example, only 8% of homes in London and 24% in the South East will remain stamp-duty-free for first-time buyers after April 2025.
Rightmove data indicates a rush among FTBs in these regions to complete purchases before the deadline.
Demand among first-time buyers in London is now reported to be 31% higher than the same period last year, compared to 28% before the Autumn Budget.
However, in regions with more affordable housing stock, like the North East, demand has stabilised, reflecting the reduced impact of stamp duty changes there.
The role of home condition surveys
The stamp duty deadline is exacerbating existing bottlenecks in the homebuying process. With the average transaction now taking 151 days, FTBs hoping to avoid higher charges must act quickly, creating stress across the ecosystem.
Amid the time-sensitive rush to complete transactions, the importance of home condition surveys cannot be overstated. However, despite the undeniable benefits, many buyers are still skipping this vital step.
The recent data from the Q3 2024 Countrywide Surveying Services (CSS) Home Survey Trends Index shows only 16% of buyers commissioned a home condition survey.
While this is an improvement from the previous quarter’s 10.6%, it still means the majority of buyers are potentially exposing themselves to significant risks.
For many buyers, a property can look perfect on the surface. However, hidden defects – whether it’s structural issues, damp, or faulty wiring – can go unnoticed without professional inspection.
These issues can result in significant and unexpected repair bills. A professional survey highlights potential problems early, providing homebuyers with the insight they need to make informed decisions, negotiate on price, or budget for repairs.
Helen Stead is head of Countrywide Home Surveys
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