Auction purchases: a savvy move to dodge stamp duty increases

With Stamp Duty changes set to come into effect in April 2025, more buyers are turning to auctions as a way to secure chain-free properties efficiently and cost-effectively.

According to NAVA Propertymark, auctions not only offer speed and certainty in transactions but also provide diverse property options, making them appealing to a wide range of buyers beyond just investors.

Stamp duty changes to watch

From 1 April 2025, the updated Stamp Duty Land Tax (SDLT) thresholds will add financial pressure to many buyers, especially first-time buyers.

Price of Property New SDLT Rates
Up to £125,000 Zero
£125,001 to £250,000 2%
£250,001 to £925,000 5%
£925,001 to £1.5 million 10%
Above £1.5 million 12%

The first-time buyer relief threshold will also drop from £425,000 to £300,000, potentially increasing tax liabilities for thousands of new homeowners.

Why auctions make sense now

Time-efficient transactions

  • Auction properties are typically chain-free, avoiding delays common in traditional sales.
  • Unconditional auctions mean buyers exchange contracts as soon as the gavel falls, with completion in 20 working days.

Variety of properties

  • Auctions offer more than just fixer-uppers, with properties spanning all shapes, sizes, and price points.

Competitive sales

  • Sellers can often secure higher profits than through private treaty, as auctions encourage competitive bidding.

Online convenience

  • Many auctions now operate digitally, allowing buyers to participate from the comfort of their own homes.

Two types of auctions explained

  1. Unconditional (Traditional):
  • Legally binding sales.
  • Buyer pays a 10% deposit upon the gavel falling, with completion within 20 working days.

2. Conditional (Modern)

  • Buyer pays a reservation fee, not part of the purchase price.
  • Allows for some flexibility but still requires financial commitment.

NAVA propertymark advice for auction buyers

NAVA Propertymark emphasises the importance of working with qualified auctioneers who understand the latest legislative changes. Their Q2 2024 Auctions Barometer revealed thriving activity, with 38% of agents reporting increase lot numbers.

Stuart Collar-Brown, NAVA Propertymark President, notes:

“The winter season is usually quieter, but Chancellor Rachel Reeves’ recent Budget changes may encourage more people to sell before the new thresholds take effect. Auctions are thriving, offering a fast, efficient route to property ownership.”

The bottom line

For buyers keen to avoid higher Stamp Duty liabilities and secure chain-free properties quickly, auctions present a strategic option. Whether you’re an investor or a first-time buyer, leveraging auctions now could mean significant savings before the April 2025 changes come into play.