Asking price discounts rise ahead of Stamp Duty changes
Homebuyers are successfully negotiating more substantial asking price discounts on property purchases in anticipation of the Stamp Duty increase scheduled for April 2025, Hamptons claims.
Research by the estate agency brand found the average buyer who had an offer accepted in November 2024 negotiated a median discount of £5,000 off the asking price.
This is the biggest discount since December 2023 and has doubled from £2,500 in October 2024.
In England & Wales, 55% of buyers successfully negotiated a discount of £2,500 or more last month, up from 51% in October 2024.
However, discounts remain less common than last year when mortgage rates peaked. In December 2023, 58% of homes were sold for at least £2,500 less than their asking price, which was the highest proportion since May 2020 during the Covid lockdown.
Despite the increase in discounts, the average seller in England & Wales still secured an average of 98.2% of their final asking price last month.
Whilst this figure has fallen slightly from 98.8% in October, it remains higher than the same month last year (98.0%) and up from 97.9% in November 2019, which reflects a typical low interest rate, pre-Covid market.
The agent is warning that buyers are running out of time for sales to complete before Stamp Duty bills increase in April 2025. Historic data suggests that around 71% of all sales agreed last month should complete before April next year.
However, only just over half of flat-purchasers (55%) are likely to complete in advance of the Stamp Duty deadline. The average flat sale takes 39 days longer to reach completion than a house, a differential which has steadily grown over the last five years.
Historically, just 37% of purchases agreed in January would go on to complete by April of the same year. These tend to be cash purchases where the buyer is in a position to proceed quickly, Hamptons said.
The Stamp Duty increases next year are hitting the purchasing power of those buying homes below £1m hardest, according to the data.
The proportion of the asking price achieved for homes sold between £500k-£1m fell by 0.7% between October and November to an average of 98.1%. Meanwhile, homes sold for less than £500k saw a 0.6% month-on-month decrease to an average of 98.3%. Here, the maximum £2,500 increase in a mover’s Stamp Duty bill in April makes up a bigger share of the overall property price.
Aneisha Beveridge, head of research at Hamptons, said:
“A month on from the Budget, we’re starting to see how changes are playing out in the housing market.
“The number of sales being agreed is ending the year strongly as buyers look to secure a home ahead of the stamp duty rise next year.
“But the window to lock in a pre-April 2025 completion is closing quickly.
“The chance of a sale agreed in December reaching completion before next April is now close to a coin flip.
“Sales that are part of long chains or where management companies are slow to respond to enquiries are now likely to incur higher stamp duty bills.
“Historically, only 37% of purchases agreed in January go on to complete by April of the same year.
“Buyers are beginning to factor in the cost of higher stamp duty bills and recent small increases in mortgage rates by pushing for bigger discounts.
“And often, sellers, who are keen to agree a deal before Christmas, are accepting.
“However, those purchasing more expensive homes have been less sensitive to the change.
“The £2,500 stamp duty increase is a smaller chunk of their overall purchase price.
“Furthermore, the Budget provided a bit more clarity about the future, supporting pricing at the top of the market.”
Kindly shared by Estate Agent Today
