First-time buyers increasingly pulled into the stamp duty net

• 30% of first-time buyers in England are now purchasing homes above £300,000, the highest share on record, meaning they face a stamp duty bill (chart 1). 

• More first-time buyers now pay stamp duty since thresholds changed in April 2025.  Back in Q1 2025, just 10% of first-time buyers in England were purchasing above the previous £425,000 nil-rate band. 

• London stands apart, with nearly four in five first-time buyers (78%) now paying stamp duty – the highest share of any region and up 5% on a year ago (chart 2, table 1). 

• The trend is also on the rise in less expensive markets, with 14% of first-time buyers in the North West and 13% in the West Midlands now paying stamp duty (chart 2, table 1). 

• First-time buyers are increasingly negotiating around the stamp duty cliff edge, with 36% of offers on homes priced above £500,000 agreeing on a sale price of £500,000 or less (table 2).

Aneisha Beveridge, Research Director at Connells Group, said: 

“For a growing number of first-time buyers, getting onto the housing ladder means saving for more than just a deposit.  Stamp duty is becoming a bigger part of the upfront cost of buying, particularly as more people purchase their first home later in life and opt for larger, more expensive properties that can meet their needs for longer.  At a time when affordability is already stretched, stamp duty costs create yet another hurdle for households trying to make the numbers stack up. 

“The end of the previous stamp duty holiday in April 2025 has been particularly painful in London and the South, where the reduction in thresholds has pulled a much wider share of new homeowners into paying tax.  In the capital, especially, even some of the most modest two-bedroom flats are being caught, while high transaction costs are also encouraging more first-time buyers to future-proof their move, rather than risk a more expensive step up later. 

“Weaker market conditions have given first-time buyers a little more room to negotiate, and many are using that to try to stay out of paying full stamp duty rates.  But that also highlights how these cut-offs can distort behaviour.  With nearly half of purchases in the capital being made by a first-time buyer, the £500,000 limit where first-time buyers lose all their relief, is increasingly shaping the pricing of homes coming onto the market.” 

A growing share of first-time buyers are now being drawn into paying stamp duty (SDLT), as rising purchase prices continue to push more transactions above the £300,000 threshold where relief begins to taper away. 

Across England, nearly a third (30%) of first-time buyers purchased homes above £300,000 this year - the highest proportion on record and up from just a small minority a decade ago.  While first-time buyer demand has remained resilient, higher house prices have meant that more buyers are losing the full benefit of stamp duty relief.  

The pressure has become more acute since stamp duty thresholds changed in England in April 2025 (for more information on this, see notes to editors).  Back in Q1 2025, just 10% of first-time buyers in England were purchasing above £425,000, the previous nil-rate band. 

Regional stamp duty pressures intensify 

London stands apart.  Nearly four in five first-time buyers in the capital (78%) have bought above £300,000 and therefore pay stamp duty, the highest share of any region and up five percentage points on a year ago.  This record high has come despite house prices in London generally softening over the last year, suggesting the increase reflects a shift in what and where first-time buyers are purchasing rather than renewed price growth.   

Back in Q1 2025, just 9% of London first-time buyers paid stamp duty by purchasing above the previous £425,000 nil-rate band.  For those who do pay, the average SDLT bill now stands at £12,690. 

Outside London, the East of England and the South East also stand out, with 40% and 38% of first-time buyers now purchasing above £300,000, respectively.  Buyers in these regions also face some of the highest average bills outside the capital, at £4,440 in the East and £5,130 in the South East.   

The trend is also becoming more visible in more affordable markets, with 14% of first-time buyers in the North West (+3% YoY), and 13% in the West Midlands now paying stamp duty.   

Changing buying patterns in London

In London, the rise in first-time buyers paying stamp duty increasingly reflects changing behaviour rather than simply rising prices.  More buyers are purchasing later in life and looking beyond central locations towards more affordable outer London markets, where they can buy larger homes and price growth has held up better. 

There is also clear evidence that buyers are thinking longer-term when making their first purchase.  This year, half of first-time buyers in London bought a home with three or more bedrooms, up from 43% a decade ago, suggesting many are trying to future-proof their move as a means of avoiding high transaction costs needed to trade up.  In London, even relatively small homes now often come with a stamp duty bill.  Nearly a third of those buying a one-bedroom home are now paying stamp duty, highlighting how limited the supply of sub-£300,000 homes has become.  For larger properties, the share is higher still, with most first-time buyers purchasing homes with four bedrooms or more now falling within the stamp duty threshold. 

Better bargaining power

Our analysis also shows that first-time buyers are increasingly able to negotiate bigger discounts.  Since the end of the stamp duty holiday in March 2025, the average asking price of homes purchased by first-time buyers has jumped by 5.0%.  However, buyers have negotiated hard, keeping the average price actually paid by first-time buyers nearly flat - rising by just 0.7%. 

First-time buyers are now securing an average of 1.0% more off asking prices compared to the month before the end of the stamp duty holiday last year.  While buyers paid 97.9% of the initial asking price in March 2025, that figure had dropped to 96.9% by May 2026, resulting in an average additional saving of £2,690 per purchase. 

Furthermore, nearly a third (32.6%) of first-time buyers in England are securing a discount of more than 5% off the initial asking price, up significantly from 24.3% during the month prior to the stamp duty changes.  Meanwhile, the share of first-time buyers successfully negotiating 10% or more off the initial asking price has risen from 9.1% to 12.2% over the same time period. 

Beating the £500,000 threshold

This negotiating leverage has helped buyers secure homes under the £500,000 first-time buyer stamp duty relief threshold, which was reduced from £625,000 last April. 

Rather than walking away from properties priced above the new limit, some buyers have successfully negotiated offers to keep them below the tax threshold.  Nationally, 36% of first-time buyer offers on homes originally priced above £500,000 were ultimately agreed at £500,000 or less, ensuring they still qualify for tax relief. 

• The London Effect: In the capital, nearly half (48%) of all first-time buyer offers on homes priced above £500,000 were successfully negotiated down to meet or beat the threshold. 

• Flats vs. Houses: 50% of first-time buyer offers on flats originally priced above £500,000 were agreed at or below the threshold.  For houses, where demand remains more resilient, 29% of buyers managed the same feat.