Buying a house before the Stamp Duty changes

Posted on January 10, 2025

With fees for Stamp Duty set to change in April and the house buying process sometimes taking several months now is the time to act to get on the property market before the Stamp Duty and Land Tax changes, warn conveyancing and property solicitors.

The rush to avoid paying Stamp Duty has already started say property experts and high-value areas are already experiencing more demand from first-time buyers, according to Rightmove research.

Buying your first home can be an exciting yet complex process and with deadlines like this looming the legal considerations are critical to ensure the transaction proceeds smoothly.

First-time buyers Stamp Duty

The first-time buyer Stamp Duty relief for first time buyers is set to drop at the end of March 2025 from £425,000 to £300,000, which is a significant amount of money, so is it time to act now and buy, or wait until the market stabilises?

At Pearson we help hundreds of first-time buyers get their initial strep on the housing ladder every year and it’s always a pleasure to see the excitement of that first big move, says Emma Collinson, who works in our residential property department.

Of course, it all depends on your local property market. Homes in London and the South East will be more affected and we expect demand from our clients in these areas to be higher as they try to benefit from lower Stamp Duty rates before April 1^st, than say the North West and North East, where first-time buyer homes are usually a little cheaper.

“Buying a house can be a daunting and confusing process, no matter what stage of life you are in,” says Emma. “For first time buyers there is so much they do not realise about the whole process, but by taking them through it step by step, allowing them 24/7 online access to our property portal and working closely with them explaining the process we hopefully build a long-lasting relationship and when they come to move again they remember we did a good a job for them.”

“It’s a good idea to instruct us early in the process as we can advise on mortgage brokers and work with our other legal teams on any other issues,” advises Emma.

Advice for First-Time Buyers

Buying your first home is a significant milestone, but it comes with legal complexities. Here Emma sets out what potential homeowners need to think about:

1. A solicitor or licensed conveyancer is essential for handling the legal aspects of buying a home. They will:

Conduct searches: Check for planning issues, disputes, or risks (e.g., flood zones). Your solicitor or conveyancer will carry out searches to uncover potential issues, such as:
local authority searches to identify planning permissions, road schemes, or building regulations affecting the property. Environmental searches checking for contamination, flooding, or subsidence risks. Water and drainage searches to confirm sewer connections and drainage responsibilities. These searches ensure there are no hidden surprises after you purchase the home.
Review contracts: Ensure the terms of the sale are fair and legally sound.
Register the property: Finalise the transfer of ownership with the Land Registry.

2. Review your own contract thoroughly:

The contract you sign with the seller is legally binding. Before signing:

Ensure all terms are clear, including the purchase price, fixtures and fittings, and completion date.
Check for any clauses that may affect your rights (e.g., restrictive covenants).

3. Understand Stamp Duty Land Tax (SDLT):

First-time buyers in England and Northern Ireland may benefit from Stamp Duty relief.
No SDLT is payable on properties costing up to £425,000, (this is for first time buyers only) but as noted this all changes on April 1st
For properties costing up to £625,000, 5% SDLT is payable only on the amount above £425,000.
If the property exceeds £625,000, standard SDLT rates apply. Rules differ in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax).

4. Mortgage Agreement and Financial Checks

Before making an offer on your property you must also:

Obtain a Mortgage in Principle (MIP) from your lender to demonstrate your borrowing capacity.
Carefully review the terms of your mortgage agreement, including repayment periods, interest rates, and fees.
Your solicitor will also ensure your lender’s requirements are met before releasing funds for completion.

5. Surveys and valuations

A property survey is crucial to identify any structural issues and so the following are advisable:

Condition Report: Basic survey, suitable for newer properties.
Homebuyer Report: Mid-level survey highlighting defects and repair costs.
Building Survey: Comprehensive survey for older or unusual properties.
The lender will also conduct a valuation to ensure the property is worth the loan amount but it is highly recommended that you conduct your own in depth survey.

6. Understand Freehold vs Leasehold

In the UK, property ownership can be either freehold or leasehold:

Freehold: You own the property and the land outright.
Leasehold: You own the property but not the land, and you may have to pay ground rent and service charges.
Check the remaining lease term—many lenders require at least 80 years left but this can vary from lender to lender
If needed, consider negotiating a lease extension during the purchase.

7. Exchange of contracts

Once all searches, surveys, and negotiations are complete, contracts are exchanged. At this stage:

The purchase becomes legally binding.
You’ll pay a deposit (typically 10% of the purchase price).
Ensure your solicitor explains the terms thoroughly before exchange.

8. Completion and Transfer of Ownership

On completion day amidst all the excitement here is what happens legally:

Your solicitor transfers the remaining funds to the seller.
You receive the keys to your new home.
Your solicitor registers your ownership with the Land Registry.

9. Budget for additional costs

Be aware of extra expenses beyond the property price:

Solicitor/conveyancing fees: we will have explained up front what pour costs are so there are no hidden shocks and surprises
Surveys: £400–£1,500 depending on the type.
Stamp Duty Land Tax (if applicable) and again be aware of the April 2025 deadline and the rate changes.
Moving costs: Removal services and related expenses.
Mortgage fees: Arrangement fees, valuation fees, etc.

10. First-Time Buyer Schemes

One final thing I always mention to new clients are the government schemes to help first-time buyers and I am sure most people are aware of them, or will have been told by there mortgage broker if they already have one.

Help to Buy Equity Loan (England): Closed in 2023 but replaced by similar local initiatives.
Lifetime ISA: Save up to £4,000 annually with a 25% government bonus towards a first home.
Shared Ownership: Buy a share of a property (25%–75%) and pay rent on the rest.

11. Protect yourself with home insurance

Once you exchange contracts, you’re legally responsible for the property. Arrange buildings insurance to cover potential damages.

12. Keep all documents safe

Safely store documents as they may be needed for future reference or legal purposes. Retain copies of:

The purchase contract.
Land Registry documents.
Searches and surveys.
Mortgage agreement.

“Buying a house can feel overwhelming, but having the right solicitor and taking the time to understand the process will protect you. I love working with first-time buyers and steering them through the process, there is nothing better than their excitement on completion day and being with them for the start of something new,” says Emma.

How can we help?

If you are a first-time buyer or require legal advice on selling a property contact our conveyancing and property solicitors on 0161 785 3500 or email enquiries@pearsonlegal.co.uk

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.