‘Smart’ move to save £5,000 if you’re buying a property this year | Personal Finance | Finance

First-time buyers could save thousands of pounds by strategically targeting properties priced just below £500,000, experts suggest.

This approach could prove particularly valuable as significant changes to Stamp Duty Land Tax (SDLT) are set to take effect on April 1.

Stamp Duty is a tax currently levied on homes priced over £250,000. The amount depends on the property’s value, with different rates applying at different price points.

For first-time buyers, the Government currently offers relief to help ease the financial burden of purchasing a home. However, from April 1, this relief will decrease significantly as the temporary rise in the Stamp Duty thresholds come to an end.

The nil-rate threshold for first-time buyers will drop from £425,000 back to £300,000. A 5% rate will apply to properties priced between £300,001 and £500,000. The maximum property price eligible for first-time buyer relief will be reduced from £625,000 to £500,000.

Under these new rules, a first-time buyer in London purchasing an average-priced home of £502,098 would face a Stamp Duty bill of £15,104. However, there’s a “smart” strategy to save money, according to experts at Mojo Mortgages.

By targeting properties just below the £500,000 threshold – such as offering £499,999 on a home listed at £510,000 or £515,000 – buyers can avoid the higher tax rate that kicks in at £500,000.

This tactic could reduce the buyer’s Stamp Duty bill to just £9,999, saving an immediate £5,105.

John Fraser-Tucker, head of mortgages at Mojo Mortgages, said: “This significant saving is due to how Stamp Duty is calculated in brackets.

“By staying just under the £500,000 threshold with an offer of £499,999, buyers avoid the higher rate that kicks in above this price point. It’s a simple yet effective strategy that can make a real difference in today’s challenging market.”

While London buyers face the biggest impact, the effects of these changes vary significantly across regions.

Mr Fraser-Tucker said: “In contrast to London, where the average property price is significantly higher, many other regions will not incur any Stamp Duty based on the average price for first-time buyers. This makes it easier for buyers in those areas to enter the market.”

However, he noted: “While London presents unique challenges with higher costs, it also offers opportunities for those who act quickly.”