The UK is witnessing a sharp rise in mortgage applications as homebuyers rush to beat the upcoming stamp duty changes in April 2025. Santander UK has reported a 130% increase in mortgage applications in the final quarter of 2024 compared to the same period in 2023. This spike is driven by buyers looking to save thousands of pounds before the stamp duty discounts become less generous under the new Labour Party government policies.
What’s Changing in Stamp Duty from April 2025?
From April 1, 2025, stamp duty benefits will be reduced, making property purchases more expensive for many buyers:
- First-time buyers: The nil-rate band will decrease from £425,000 to £300,000.
- Other homebuyers: The threshold for tax-free property purchases will drop from £250,000 to £125,000.
These changes mean buyers completing purchases before April 1 can potentially save thousands in stamp duty costs.
Why Are Mortgage Applications Increasing?
Santander UK estimates that an average property purchase takes four months from mortgage approval to completion. Buyers who started their purchase late last year are more likely to complete their transactions before the deadline, securing lower stamp duty rates.
Graham Sellar, head of intermediary channel – mortgages at Santander, explained:
“We all know that buying a home – whether it’s our first or our forever home – comes with significant costs. Every penny counts when considering things like legal fees and removal costs. It’s great to see so many people making the most of the holiday and securing their new home ahead of April 1.”
How Much Can Homebuyers Save Before April 1?
The potential savings depend on the location and property value. Santander provided the following estimates:
- South East England: First-time buyers of an average-priced property (£385,600) can save up to £4,280 if they complete their purchase before April 1.
- London: The biggest impact will be on London buyers. A first-time buyer purchasing an average London home (£535,700) will pay £5,535 in stamp duty before April, but £16,785 from April, a difference of £11,250.
First-Time Buyers Are Compromising on Location
A recent survey by Opinium for Santander found that many first-time buyers are compromising on location just to get on the property ladder.
- 67% of first-time buyers in the past two years had never visited their new neighbourhood before purchasing.
- This is a significant increase from 51% among buyers who purchased more than five years ago.
With rising property prices and changing tax policies, buyers are prioritizing affordability over familiarity when choosing their new homes.
The upcoming stamp duty changes are driving a rush in mortgage applications, as buyers try to complete their purchases before April 1, 2025. With the nil-rate bands decreasing, future buyers will face higher stamp duty costs, especially in London and the South East. The recent surge in applications shows that many homebuyers are taking advantage of the current tax benefits while they still can. If you’re planning to buy a home, now might be the best time to act before the new rules come into effect.
