We’ve been here before... there’s an impending sense of déjà vu with the upcoming stamp duty hike in April 2025. Just as with the stamp duty holiday, conveyancers are enduring a rush of home movers in England and Northern Ireland trying to push their sale through before March 31st.
The biggest impact is on first-time buyers who see Stamp Duty relief dropping from a threshold of £425,000 to just £300,000. According to Rightmove, that means that only a lowly 8% of homes for sale in London will be Stamp-Duty free. The North-East, with lower average property prices, fairs much better (with 84% of properties Stamp-Duty free) but still impacted, nonetheless. Nationwide has stated that this rise will affect one-fifth of first-time buyers.
With no word on any replacement scheme for Help to Buy, first-time buyers looking to purchase need to move as soon as possible or risk paying out thousands more. However, it is worth noting that the hike in stamp duty for second-home purchases could deter investors, giving first-time buyers a greater chance of securing a home. As of April 2016, those buying second homes (including buy-to-let properties) had to pay an extra 3% on top of their existing stamp duty bill. The autumn budget 2024 increased this from 3% to 5% on 31st October 2024. Rachel Reeves stated that this will, “support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years.”
If it plays out as Rachel Reeves suggests, you may see an increase in first-time buyers seeking your services, making it a smart move to focus your marketing efforts on this audience. The alternative scenario is that many first-time buyers will be priced out of the market, so your caseload may consist more of higher-end properties where affluent home movers can absorb the tax increases.
The stamp duty hike is an extra blow to landlords already navigating regulation changes. These hikes will not only affect how many properties landlords buy (putting pressure on an already low rental supply) but also the extra tax costs may be passed onto the renters, pushing already-unaffordable rents up even further. More landlords may join the others selling up in their droves, especially in London. This can lead to a more complex workload for the conveyancer compared to a standard residential sale. For properties with tenants in situ, you’ll need to navigate tenancy agreements, ensuring that any buyer understands the responsibilities of purchasing a previously buy-to-let property. Handling cases with multiple tenants just adds an extra layer of complication. The process of selling buy-to-let properties is more detailed and time-intensive, adding more pressure to your already burdened sector.
It currently takes 119 days on average, or four months, for a property to go from SSTC to completion. This means that buyers needed to have had transactions underway before Christmas to attempt to meet the deadline. This may be even longer with the current strain on the industry. Leasehold or complex purchases can take even longer. The good news is that this rush will only impact you for a short period. However, the truth is that many home buyers have no idea how long home buying actually takes. A survey by Open Property Data Association (OPDA) found that a massive 57% of respondents believed the homebuying process would take less than two months from offer accepted to exchange. In reality, 46% of cases took between three and six months and in 16% of cases, it took over six months. This highlights how uninformed the consumer is and suggests you may still be flooded with last-minute requests to rush through cases well into the new year. Some conveyancers have already anticipated this and have added a fee to expedite the conveyancing process for those looking to hit the deadline, so their case is prioritised. This could be a sound strategy for increasing your fees in the short term if it’s viable for your law firm to do so.
There is also concern surrounding a potential strike by HM Land Registry staff following a mandate to work in the office for three days a week. This could delay completion transactions further. Frustrating news in the run-up to the stamp duty holiday. However, HM Land Registry has told Law Gazette that it would be unlikely to cause an issue and that essential services are likely to be maintained just as they were in 2023. Whether there is an impact remains to be seen.
Our analysts anticipate a strong start to 2025 for property transactions. Supply is 9.4% higher than it was in 2023, and demand (sales agreed) is 17.9% up on 2023. This all signals a healthy quarter one for the 2025 residential property market. Healthy... or overwhelmed, perhaps is the more apt word! While this forecasts that conveyancers are looking likely to remain busy for the foreseeable future, it's important to remember that not all leads hold the same value and that prioritising the cases you take in this busy period is crucial. Take a look at our blog that touches on this further here.
The stamp duty hike will no doubt cause a temporary spike in conveyancing demand. However, when the stamp duty increase takes effect, demand will likely cool from April onwards. This anticipated decline in demand could then put pressure on property prices. Though we’ve seen instruction prices increase by 1.3% in the last year, one of the biggest trends we’ve observed in 2023 and 2024 is price reductions. This suggests that prices are already perceived as overly inflated. In fact, we observed the largest number of price reductions this year, at nearly one million.
The increased tax could put extra pressure on prices in 2025 as buyers will demand lower prices to offset the cost of stamp duty. That is if they can afford the stamp duty costs at all. Cornerstone Tax states that 26% of Brits are unable to afford property due to stamp duty costs, while 15% of landlords are selling up due to the increasing costs. Stamp duty hikes could cause a market downturn, particularly in the lower end of the market, as it becomes less attractive to move.
The plan for 2025 is to have all hands on deck for the first quarter as you’ll have pressure from home-movers trying to push their completions over the line before the stamp duty rise deadline. There are concerns in the legal sector on how to cope with the added workload. For the remainder of the year, it is difficult to anticipate what may happen but if the market does become subdued, it makes sense to continue your marketing efforts now so that you have a healthy stream of work coming through when you do experience quieter times. Don’t leave it until you’re quiet to start marketing. When a brand stops marketing, Nielsen states that it loses 2% of its long-term revenue and takes 3-5 years to recover. The key is to continue marketing now, when you’re busy, to keep you ticking over in quieter periods that could occur in the latter end of the year.
In Landmark’s report ‘Residential Conveyancing: Looking ahead to 2025,’ they asked law firms what they anticipate will have the biggest impact next year. Half of the respondents stated it would be the economic climate, interest rates and the cost of living. These are all outside of the control of the conveyancer. In terms of prioritising business to improve efficiency or reduce costs, 52% of respondents are assigning workloads more effectively, 44% are proactively sourcing new business and 41% are improving training. All are sound strategies to tackle the new year head-on and keep the momentum going. The key will be to continue marketing right through the rush so you have clients throughout the entire year and beyond the spike in cases.
TwentyConvey supplies conveyancing leads for solicitors and provide law firms with data on the conveyancing market. If your strategy is to source more business, we can help. If you're interested in finding out more, get in touch.