Stamp Duty Burden Hits Thousands of First-Time Buyers
Newly released data has exposed a significant financial hurdle for aspiring homeowners across the United Kingdom. In the 2024/25 fiscal year, nearly 37,000 property purchases by first-time buyers were subjected to stamp duty land tax, with many facing bills exceeding £5,000.
Detailed Breakdown of Tax Payments
A Freedom of Information request submitted by the smart money application Plum to HM Revenue & Customs uncovered comprehensive statistics. The analysis revealed that the average stamp duty payment made by first-time buyers who claimed relief but still had liable transactions during this period stood at £4,073.
Specifically, among the 36,999 transactions that benefited from first-time buyer relief yet remained subject to stamp duty—representing approximately one in four such purchases—the tax impact was substantial:
- 24,955 transactions incurred stamp duty charges of £2,000 or more.
- 13,529 transactions faced significantly higher bills of £5,000 or more.
- 1,285 relief claims resulted in the maximum possible tax burden of £10,000.
Expert Analysis and Future Projections
Rajan Lakhani, a personal finance expert at Plum, provided critical insight into the situation. "Stamp duty has long been one of the most hated taxes there is," Lakhani stated, "but the pain faced by first-time buyers is particularly acute given the financial challenges they already face in raising a deposit."
Lakhani expressed concern about market accessibility, questioning "how many are being shut out of the housing market completely because they simply can't afford the stamp duty." He issued a stark warning about future trends, noting that "the new stamp duty relief thresholds mean tax bills are only going to grow bigger in the years ahead as rising house prices mean more and more first-time buyers lose entitlements to stamp duty relief altogether."
Plum reinforced this projection, indicating that "first-time buyer stamp duty bills are now set to soar even further as new relief thresholds which took effect in April begin to bite."
Personal Experience: The Human Impact
The statistical reality translates into tangible difficulties for individuals navigating the property market. Olga Demi, a 37-year-old prospective buyer, shared her experience of attempting to purchase a home in Essex with her partner Scott, who works in construction as a self-employed professional.
"Stamp duty costs can push buyers below key lending thresholds," Demi explained, "meaning higher loan-to-value ratios and less attractive mortgage rates. It just makes buying a home even harder."
Demi highlighted how Lifetime ISA top-ups provided crucial support, noting that "without those LISA top-ups, we'd just have to save for much longer or alternatively compromise on the kind of home we want, so it's made a huge difference to how confident I feel about buying."
The couple faces multiple challenges in their home search. "Property prices feel intimidating, especially in the south east," Demi admitted, "and it's difficult to know where to start when you're not already on the ladder." Their current rental situation adds complexity, as their landlord plans to sell the property they occupy.
"Our landlord is now planning to sell the property, so the timing has aligned," she said. "We're looking to buy this year just as the property is being sold. Without the stability we've had as renters, we wouldn't be in this position."
Their property requirements include seeking a slightly larger house than their current rental, with good train links to London for Demi's commute. While a driveway would be ideal, Demi acknowledged that "that may be something we have to compromise on depending on what's affordable in the areas we're considering."
The combination of stamp duty costs, rising property values, and personal financial constraints creates a perfect storm for first-time buyers across the UK, with data suggesting the situation will intensify in coming years.
