Following the Autumn budget, the Chancellor has introduced an increase in Stamp Duty Land Tax (SDLT) rates that will impact home buyers (including first time buyers) buyers of second homes and property investors.
The update relates to the temporary increase in SDLT thresholds for main residences, introduced in September 2022. The threshold increase allowed buyers to enjoy reduced SDLT costs on purchases up to £250,000. However, this temporary change is scheduled to expire on 31 March 2025, after which SDLT rates will revert to pre-2022 levels.
For property transactions completed after 31 March 2025, here’s what the SDLT rates will look like for main residences:
Property Value | SDLT Rate on Main Residence |
Up to £125,000 | 0% |
£125,001 to £250,000 | 2% |
£250,001 to £925,000 | 5% |
£925,001 to £1.5 million | 10% |
Over £1.5 million | 12% |
This reversion may lead to an increased cost for buyers purchasing properties above £125,000 after the threshold expires. Buyers who are in the process of purchasing or planning to buy a home might consider timing their transactions accordingly to benefit from the current rates before March 2025.
First-Time Buyers: Changes to Relief Thresholds
The autumn budget will also impact first-time buyers by reducing the SDLT relief thresholds. From 31 March 2025, the relief threshold will return to its previous level of £300,000, down from the current £425,000. For those purchasing their first home, the SDLT rates after this date will be as follows:
Property Value | SDLT Rate for First-Time Buyers |
Up to £300,000 | 0% |
£300,001 to £500,000 | 5% |
For example, if you’re a first-time buyer purchasing a property priced at £350,000 after March 2025, you’ll pay SDLT of £2,500, whereas under the current threshold, this purchase would incur no SDLT.
The new budget has introduced several adjustments to SDLT, most notably an increase in the surcharge on second homes and buy-to-let properties. These changes took effect on 31 October 2024, and property buyers will need to consider these updates as they plan their transactions:
Second Homes, Buy-to-Let, and Company Purchases: The SDLT surcharge for these categories will increase from 3% to 5%. For example, if you’re buying a second home valued at £300,000, you would now pay an SDLT rate of 10% on the amount above £250,000, instead of the previous 8%.
Below is a breakdown of the new rates for second homes and investment properties:
Property Value | SDLT Rate on Second Homes & Investment Properties |
Up to £250,000 | 5% |
£250,001 to £925,000 | 10% |
£925,000 to £1.5 million | 15% |
Over £1.5 million | 17% |
These changes increase the cost of investing in second properties, potentially affecting the affordability of buy-to-let and investment purchases. It’s crucial for investors to assess these rates carefully when budgeting for future purchases.
Potential purchasers can still beat these increase’s, the property market is moving and there’s still time to complete a sale by the 31st March 2025 deadline, we have several properties already coming to the market in early January so please contact us for a free valuation and we can discuss your selling options.
