Stamp duty hike drags more than 80% of buyers into paying hated tax on homes

A stamp raid has dragged the vast majority of home buyers into paying the hated tax on home purchases, new data has revealed.

Property website Zoopla claims 83 per cent of buyers would pay stamp duty if they bought a home today, compared to 49 per cent before April, when the tax rules changed.

This has led more buyers to negotiate a price reduction to compensate for the extra tax, which is costing home movers up to £2,500 more than before and first-time buyers potentially £11,250 extra.

Richard Donnell, executive director at Zoopla, said: ‘Many more home buyers are paying stamp duty since April, and want this extra cost reflected in the price they pay.’

But despite the drag of stamp duty rising, the property website said housing market activity was picking up, thanks to new mortgage rules which allow buyers to borrow more.

In the four weeks to 20 June, buyer demand for new homes jumped by 11 per cent and the number of sales agreed saw an 8 per cent spike compared to the same period the year before.

The property website said recent changes to the way lenders test whether a borrower can afford a mortgage had been a 'catalyst' for the increased activity.

Since March, multiple high street lenders have loosened their mortgage rules, following a change in guidance from the City regulator.

They have done this by relaxing their 'stress tests' - the part of a mortgage application where the lender checks that the borrower could still meet their monthly payments if their interest rate went up.

It means borrowers are now being tested against lower 'worst-case scenario' rates, meaning the average home buyer can borrow around £35,000 more.

More recently this has been followed up by a change to the rules around how many mortgages banks can lend at more than 4.5 times the borrower's income - enabled by a rule shift backed by Chancellor Rachel Reeves.

Despite the spike in activity, house price growth fell slightly in the month of June because of the current buyers' market, going up by 1.3 per cent on average compared to the same time last year.

This was less than the 1.4 per cent growth seen in the year to the end of May 2025, and the 1.6 per cent in the year to the end of April. However, in June 2024, house price growth was just 0.4 per cent.

The recent peak was in December 2024, when prices went up by 2.1 per cent as buyers took advantage of reduced stamp duty.

The average house price is now £268,400, according to Zoopla, a modest £3,350 increase from a year ago.

Zoopla says there are currently a record number of homes on the market, an average of 37 per estate agent branch.

It also blamed April's increase in stamp duty for the subdued house price growth.

Zoopla predicted that prices would rise 1 per cent over the course of 2025, down from its 2 per cent forecast at the start of the year.

Richard Donnell, executive director at Zoopla, said: 'We're seeing healthy levels of demand and sales, but this isn't sparking faster price inflation.

'In fact, more homes for sale, particularly across southern England, is re-enforcing a buyer's market, keeping price rises in check.

'While mortgage rates are holding steady, less stringent affordability testing has boosted buying power and is supporting more sales despite increased uncertainty.'

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Regions in the south of England saw the weakest house price growth in June, according to Zoopla, thanks to prices falling in some towns and cities.

Price growth in the south east was just 0.2 per cent in June, while the south west clocked in at 0.3 per cent.

In central London's WC postcode, which includes areas such Bloomsbury, King's Cross and Covent Garden, house prices went down by 5 per cent, while in West London, covering the W postcode, they fell by 1.5 per cent.

Coastal areas also suffered. Truro, Torquay and Exeter registered the biggest falls outside of London, going down by 1.3 per cent, 1.2 per cent and 1.1 per cent respectively.

In contrast, Ireland, Scotland and northern England saw healthy rises in June.

Belfast was the top riser at 6.1 per cent, followed by Halifax (4.2 per cent), Falkirk (3.6 per cent), Motherwell (3.6 per cent) and Tweeddale (3.6 per cent).

David Powell, the chief executive of estate agent Andrews Property Group, said: 'The market is continuing to find its new normal since the stamp duty incentive was withdrawn at the end of March 2025.

'It continues to show incredible resilience, however the slow down in house prices is starting to impact consumer confidence illustrated by the increased numbers of properties currently on the market for sale.'