What’s Changing in Stamp Duty Rates?
- Gordon & Walker Estates
- Nov 15, 2024
- 3 min read
From 1st April 2025, the nil-rate thresholds and rates for Stamp Duty will revert to previous, less favourable levels. Here's what you need to know:
For All Buyers:
The nil-rate threshold will drop from £250,000 to £125,000. This means buyers will pay Stamp Duty on any property worth over £125,000, instead of £250,000 as they do now.
For First-Time Buyers:
The nil-rate threshold will drop from £425,000 to £300,000.
The maximum purchase price to claim First-Time Buyer Relief will reduce from £625,000 to £500,000.
To illustrate the change: If a first-time buyer purchases a property for £525,000 after April 2025, they will begin paying Stamp Duty on amounts above £300,000, resulting in a £5,000 tax bill—a stark difference from current rates.
How Will the Stamp Duty Changes Affect Second Home Purchases?
For second-home buyers and landlords, the changes are more pronounced, as additional property purchases attract higher rates of Stamp Duty. Here's a breakdown:
Current Rates for Additional Properties:
Up to £250,000: 5%
£250,001 to £925,000: 10%
£925,001 to £1.5 million: 15%
Over £1.5 million: 17%
New Rates from April 2025:
Up to £125,000: 5%
£125,001 to £250,000: 7% (New band)
£250,001 to £925,000: 10%
£925,001 to £1.5 million: 15%
Over £1.5 million: 17%
What Does This Mean for Second-Time Buyers?
Second-home buyers will face additional costs due to the lower nil-rate threshold and the introduction of the new 7% band for properties between £125,001 and £250,000. This means:
Higher Costs on Lower-Priced Properties: Even relatively modest purchases will now incur higher taxes. For example, a £250,000 second home will attract £8,750 in Stamp Duty under the new rules, compared to £6,250 currently.
Tougher Profit Margins for Landlords: Buy-to-let investors, already contending with rising interest rates and stricter mortgage criteria, will need to carefully consider the financial viability of their investments.
Stronger Competition in 2024: Buyers aiming to beat the deadline may create increased demand, driving up property prices temporarily. Acting early can help you avoid the rush.
Why Buy Before 1st April 2025?
Save Thousands in Stamp Duty: Purchasing before the rates revert ensures you pay significantly less tax, particularly on higher-value properties.
Secure a Property in a Competitive Market: With demand expected to surge as the deadline approaches, acting now puts you in a stronger position to negotiate.
Future-Proof Your Investment: Buying before the changes provides certainty in your financial planning, especially for landlords and second-home buyers.
Who Can Benefit From The 2025 Increases In SDLT?
The Government (of course!)
Increased Revenue: The higher SDLT rates will generate additional tax revenue for the government, which can be allocated towards public services, infrastructure development, or addressing housing-related issues.
Cooling Overheated Markets: Higher costs for buyers may slow down speculative purchases, particularly in markets where demand outstrips supply, helping to stabilise prices.
2. First-Time Buyers (Indirectly)
Reduced Competition: With higher costs deterring buy-to-let landlords and second-home buyers, first-time buyers might face less competition in certain areas, particularly for lower-priced properties. This could create a more accessible market for them.
3. Home Sellers in Lower Price Brackets
Increased Demand Before April 2025: Sellers looking to move before the new rates take effect may benefit from heightened demand as buyers rush to complete transactions before the deadline.
4. Property Investors with Long-Term Strategies
Market Adjustment Opportunities: Investors with significant capital may see opportunities to negotiate better deals post-April 2025, as the increased SDLT costs could lead to reduced demand and lower property prices.
5. Conveyancers and Estate Agents (Short Term)
Boost in Transactions Before April 2025: The rush to beat the SDLT changes may result in a surge in property transactions, benefiting professionals involved in the buying and selling process.
While the increases may seem disadvantageous for many buyers, they also create opportunities and incentives for specific groups in the property market. These dynamics will depend heavily on local market conditions and how buyers adapt to the changes.
Final Thoughts
The upcoming Stamp Duty changes present challenges but also opportunities for proactive buyers. Whether you're a first-time buyer, a landlord, or purchasing a second home, timing your purchase strategically could save you thousands.
If you're considering buying a property before the changes take effect, contact Gordon & Walker Estates today. Our team is here to guide you through every step of the process and help you make the most of this critical window of opportunity.