Why First-Time Buyers Are Paying More Stamp Duty Than Ever — and How to Work Out Your Bill

Stamp duty was designed, in part, to make it easier for first-time buyers to get on the property ladder by offering relief on the tax due on their first purchase. But rising house prices combined with a shrinking relief threshold mean a growing share of first-time buyers are now paying stamp duty for the first time — often without realising it until late in the process.

What changed

The relief rates changed on 1 April 2025, when a temporary, more generous threshold ended. The nil-rate threshold dropped back down to £300,000 from £425,000, and the maximum property price at which first-time buyer relief applies at all fell from £625,000 to £500,000. In practice, that means:

• No stamp duty on the first £300,000 of a first home's price.
• 5% stamp duty on the portion between £300,001 and £500,000.
• No first-time buyer relief at all above £500,000 — buyers pay the standard rates from £0, losing the relief entirely rather than just the benefit above the threshold.

The numbers behind the headline

According to analysis by Connells Group, 30% of first-time buyers in England purchased homes above £300,000 in 2026 — double the proportion recorded a decade ago. London is by far the most affected region: 78% of first-time buyers there now buy above the £300,000 nil-rate threshold, and the average stamp duty bill for a London first-time buyer now stands at £12,690 — money that has to be found on top of a deposit, legal fees, and moving costs.

This is a straightforward consequence of house price growth outpacing a fixed tax threshold: a nil-rate band set in cash terms doesn't move as prices rise, so more buyers get pulled into paying tax over time even though the rules on paper haven't changed for them personally.

Who still qualifies for relief

To claim first-time buyer relief, you and anyone buying with you must never have owned a property or a share of a property anywhere in the world — including inherited shares, property owned abroad, or a share in a property gifted years ago that you may have forgotten about. Setfords Solicitors' guide has more detail on edge cases that catch people out, such as previously owning a buy-to-let before ever living in a home yourself.

Checklist: working out your stamp duty bill

• Confirm you and your co-buyer(s) genuinely qualify as first-time buyers — check for any prior part-ownership, including overseas property or inherited shares.
• Use the official HMRC Stamp Duty Land Tax calculator to get an exact figure based on your purchase price and location.
• Remember Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax) have different thresholds and reliefs from England and Northern Ireland — don't assume the England/NI rates apply.
• Budget for the stamp duty bill separately from your deposit — it's due within 14 days of completion and mortgage lenders don't fund it.
• If you're buying near a threshold (e.g. £495,000–£505,000), run the numbers on both sides — crossing £500,000 loses the relief entirely, not just on the amount above it.

How this compares internationally

Transfer taxes on home purchases exist in many countries but work very differently. In Australia, stamp duty is set at state level, with some states offering full first-home-buyer exemptions up to a set price. In the US, most states charge no equivalent purchase tax at all, relying instead on ongoing annual property taxes, which the UK does not apply in the same way (council tax is a separate, much smaller annual charge).

Key Numbers

• Nil-rate threshold for first-time buyers: £300,000
• Maximum price for any relief: £500,000
• First-time buyers in England now buying above £300,000: 30% (double a decade ago)
• Average London first-time buyer stamp duty bill: £12,690

Sources

• First-time buyers face rising stamp duty burden — PropertyWire
• Do First-Time Buyers Pay Stamp Duty? — Setfords Solicitors
• Stamp Duty Land Tax — GOV.UK
• Revenue NSW — stamp duty first home buyer exemptions

Educational content only — not financial advice.