What You Need to Know about the upcoming stamp duty changes this April
Capital & Interests: Upcoming Stamp Duty Changes: What You Need to Know
ADRIAN ANDERSON 03.02.2025
On The First Of April
Changes to the Stamp Duty thresholds are set to take effect, marking a shift in the UK property market. These adjustments, announced by Rachel Reeves in last year’s budget, will see the end of temporary relief measures introduced by the Conservatives. This change will affect everyone planning to move - and will mean higher costs for many buyers, but particularly first-time buyers. Here’s what these changes mean and how to prepare.
What is Stamp Duty?
Stamp Duty, or Stamp Duty Land Tax (SDLT), is a tax paid by property buyers in the UK. It’s a one-off payment made when the purchase is finalised. How much you’ll need to pay depends on a few things, like whether you’re a UK resident, a first-time buyer, replacing your main home, purchasing an additional property, or buying through a company. It only applies to properties or land that costs more than a certain amount.
Three years ago, the government lowered the upfront costs of moving home by temporarily changing the thresholds of stamp duty. They did this in the hope that it would support the housing market, and help those who were hoping to get on the housing ladder.
What are the Changes?
The temporary increase to Stamp Duty thresholds are about to be withdrawn, with the lower threshold reduced from £250,000 to £125,000. For first-time buyers, the threshold for zero Stamp Duty will also fall, from £425,000 to £300,000. Properties priced between £300,000 and £500,000 will attract a 5% rate, while any portion above £500,000 will incur standard rates.
So what does that mean? Many first-time buyers will be paying more Stamp Duty than they have in recent years, particularly in high-demand areas where property prices exceed the £300,000 threshold. For second home buyers, landlords, and companies, the additional 3% SDLT payable has already increased to 5% from October 2024.
A Surge in Market Activity
As the deadline approaches, we are seeing a surge of activity in the property market, as buyers rush to complete transactions under the current thresholds, before the changes take effect. We are seeing increased competition for properties in certain price brackets, competition for properties and added pressure on conveyancers, solicitors and lenders to meet tight timelines.
After the changes are implemented, the market may see a slowdown in activity, with higher SDLT rates deterring buyers - particularly first-time buyers. For those who are unable to complete their purchase before April, there may be opportunities to negotiate lower property prices if demand temporarily cools - but the overall affordability of homes remains a significant challenge, and the return to pre-2021 SDLT thresholds is likely to only exacerbate this issue.
How Buyers will be Affected
First-Time Buyers: Many will now pay Stamp Duty on properties previously exempt under the temporary measures - losing access to higher tax-free thresholds means this group will see the greatest negative impact from the adjustments.
Second Home Buyers, Landlords, and Companies: These groups will continue to face higher SDLT rates, making strategic planning crucial for any investments.
Actions to Take Now
If you’re planning to buy, here’s how to minimise the impact of these changes:
Move Quickly: Begin the buying process now to maximise your chances of completing your transaction under the current thresholds. Delays can be costly, so acting swiftly is essential.
Engage Professionals Early: Work closely with solicitors, conveyancers, and lenders to streamline the process. Engaging with this early will help you get all your paperwork in order, and will reduce the risk of missing the 31st March deadline.
Prepare for Negotiations: Ensure your finances are in order, to make swift offers and secure your mortgage. If you anticipate missing the deadline, be ready to negotiate on pricing to secure a fair deal under the new regime.
Staying Informed
As these changes unfold, staying informed and proactive is crucial. Understanding the evolving property landscape will help you to make informed decisions and secure the best possible outcome.
At Anderson Harris, we’re here to guide you through every step of the process. Contact our team today for personalised advice, and follow us on social media for the latest property market updates. Whether you’re a first-time buyer or an experienced investor, our team can help you navigate this transitional period with confidence. Get in touch today for a conversation and a tailored solution.