First time buyers in some parts of the country will have to find as much as £11,250 extra to get on the property ladder with a decision to end the stamp duty holiday next April.
The Chancellor has decided not to continue with an extension to stamp duty concessions that were put in place by the last Conservative government.
As a result, the vast majority of people buying a property after April 1 next year will have to find thousands of pounds extra.
The change in policy means there is likely to be a property purchase rush over the coming weeks as people try to push through sales in order to avoid the tax hit.
The Chancellor has decided that the nil rate for paying stamp duty on a home will fall from £250,000 to £125,000 from April 1.
At the same time the threshold rate at which first-time buyers do not pay stamp duty will fall from £425,000 to £300,000.
Industry research by the estate agent trade body shows that someone buying a property at the UK average price are likely to see the stamp duty bill more than double from £2,150 to £4,650.
First-time buyers in London hoping to purchase an average-priced house at £531,212 are set to be worst affected, having to find an additional £11,250 when the changes take effect.
Nathan Emerson, chief executive at the estate agency body Propertymark, said: “The Autumn Budget will likely uplift the housing market over the coming months, as people potentially look to complete before any increases on Stamp Duty come into effect next April.
“It is however important to consider continued house price growth, even in the short to medium term, as overall pricing gains should outweigh any proposed stamp duty increases for the very highest percentage of buyers.”
Laura Suter, director of personal finance at AJ Bell, warned: “A decision by Labour not to extend temporary cuts to stamp duty rates in the Budget means those buying a new home will pay thousands more in tax from next April.
“Former Prime Minister Liz Truss introduced cuts to stamp duty for both first-time buyers and home movers, but they expire on 31 March next year and new Chancellor Rachel Reeves has chosen not to extend them.”
She added: “A cut to interest rates has only just reignited the property market after a period of sluggish sales, but now Rachel Reeves has thrown cold water on its fortunes with a big tax hike for home movers.
“First-time buyers will be hit the hardest as they see their tax-free band dramatically reduced. At the same time those buying a more expensive first home will no longer be eligible for the stamp duty break.”
Warning of a property sales rush, she said: “We’ll inevitably see a flurry of people looking to lock in their home purchase before the deadline next March – with estate agents and solicitors braced for some long days ahead of the finish line.
“We saw a similar story when stamp duty breaks were introduced during the pandemic and then expired, with a boom in house sales ahead of the deadline. This rush to complete in time could push prices up and lead to more competition in the housing market.”
