Stamp duty hike triggers 104% rise in property sales

Sara White, Editor, Business & Accountancy Daily

The end of the stamp duty land tax (SDLT) relief for first-time buyers creates temporary hike in property transactions, but prices have already dropped.

HMRC’s monthly property transactions for March 2025 showed a surge in sales as people rushed to avoid the SDLT increase on 1 April, but this is not a sign of a reviving property market.

Total property sales rose to 177,370, more than double the figures from March 2024 where the number of completed purchases was 86,810, up 104%.

The amount of tax raised are not yet available from HMRC, but February was a very strong month with tax take up 20% to £300m compared with the previous year accounting for 109,700 transactions.  The level of sales was driven by first time buyers trying to beat the end of the £250,000 tax-free SDLT threshold in March.

Karen Noye, mortgage expert at Quilter, said: ‘The surge in property transactions in March is a textbook example of how stamp duty changes can artificially distort housing market activity.

‘With thresholds reverting in April, buyers scrambled to complete purchases before facing higher tax bills. It’s no coincidence that residential transactions jumped over 60% compared to February as many were racing against the clock to get deals over the line.’

The rise in transactions is unlikely to last with property sales set to return to normal levels immediately. Worse still Nationwide’s latest property price figures showed a 0.6% fall in property prices so far this month.

Heather Powell, head of property at Blick Rothenberg, said: ‘This buying surge is not a sign of the property market reviving. I expect this increase to mirror the pattern observed in 2021 when significant changes in the SDLT rules caused a similar increase in transactions, which were then followed by a notable decrease.

‘Now the new SDLT rate is in place, future 2025 property sales statistics will likely report a fall in the number of sales to around 100,000 per month.’

The generally slow economic growth has dented consumer confidence while the full impact of the hike in employer’s national insurance contributions (NICs) is yet to play out. This could cut jobs and impact on pay rises across the private sector while hiring has also been affected with job vacancies down. 

‘The lack of confidence in the UK economy, uncertainty about jobs and pay rises, uncertainty about when interest rates will fall, and first-time buyers struggling to afford deposits will continue to have an impact on the property market throughout 2025 despite March’s temporary buying surge,’ warned Powell.

The temporary extension to the SDLT nil-rate band came to an end on 31 March, increasing the SDLT cost of all purchases in excess of £125,000 by up to £2,500. The average first-time buyer is likely to see an average £6,250 SDLT bill as a result.

SDLT is viewed as a blunt tax but it did raise £18.3bn in 2024-25 which means calls for reform are likely to go unheeded.

Noye said: ‘Stamp duty continues to gum up the system. It discourages downsizing, traps people in homes that no longer suit their needs, and limits fluidity across the housing ladder particularly for older homeowners who might otherwise move. All of this compounds the issue of limited housing supply.

‘Given that stamp duty is not a particularly large revenue raiser for the Treasury, now would be a good time to take a longer-term view. While reform is unlikely to be imminent, it’s worth asking whether the current system is fit for purpose.

‘A properly structured review could explore how to reduce the distortions the tax creates, especially when the market is already under strain from high borrowing costs and affordability pressures.’