First-time buyers are streaming back into the London property market ahead of higher stamp duty rates coming into effect in April, the capital’s biggest estate agency chain said today.
Foxtons said it started the year with its fullest pipeline of properties “under offer” since before Brexit, partly due to the debut buyer rush.
In a trading update the company said: “The growth in the under-offer pipeline is partly driven by first-time buyer activity ahead of increased stamp duty rates from April 2025, which may result in some buyer activity being accelerated into Q1 2025 ahead of the deadline.”
Currently first-time buyers benefit from a range of reliefs first announced when Liz Truss was Prime Minister in 2022 to help young workers climb on the property ladder.
Under the scheme first-timers pay no stamp duty for properties changing hands for less than £425,000 and only 5% from £425,000 to £625,00. However, from April 1 this will revert to a nil rate up to just £300,000, well below the average price of a first-time buyer property in London, while the 5% rate will apply only up to £500,000.
That means from April 1 the average first-time buyer in London will face a stamp duty bill of around £5,600 compared to nothing today in many cases. For first time buyers purchasing close to the £625,000 ceiling the saving could be as much as £11,2540.
But CEO Guy Gittins said the stamp duty rush was just one of a number of factors driving the increase in offers. While the tax saving was a “nice to have”, he said, of more significance was “the huge backlog of people who just could not get their head round the huge increase in mortgage rates in 2023” and stayed out of the market.
Foxtons said revenue grew by 11% to around £163 million last year adjusted operating profit up by a third to around £19 million. Both figures are ahead of market expectations.
Lettings revenue, which accounts for almost two thirds of total revenue, grew by around 5%, accelerating to 11% in the fourth quarter
Sales revenue grew by around 30%, driven by a 20% increase in market share and a 10% recovery in London transaction volumes. Average sales prices were broadly flat. Sales operating losses “reduced significantly”.
The company said “the speed and extent of future interest rate reductions will likely determine the level of buyer demand in the market, with faster interest rate cuts providing an opportunity for accelerated growth.”
Foxtons CEO Guy Gittins said: “We enter 2025 with optimism. We expect the Lettings business to remain resilient and, in sales, we start the year with the highest opening under-offer pipeline since the Brexit vote in 2016. This dynamic, coupled with our results driven-culture and industry-leading Foxtons operating platform, leaves us well placed to continue to deliver against our strategic priorities in 2025.”
Foxtons will report its 2024 full year results on 5 March.
