In September 2022, as an attempt to support the housing market, the Government introduced a temporary increase to the thresholds above which Stamp Duty Land Tax (SDLT) must be paid – ‘nil-rate threshold’. This temporary increase is due to expire on 31st March 2025; meaning that there is a clear incentive to complete property transactions before April 2025.
Higher SDLT for second homes and buy-to-let properties
The nil-rate threshold is currently triggered when purchasing a property above £250,000, however, from 31st March 2025, this will return to the previous level of £125,000. This shift in the property market is likely to result in increased costs for most buyers.
SDLT rates up to 31st March 2025:
Example:
PROPERTY / LEASE PREMIUM / TRANSFER VALUE | SDLT RATE | (Property worth £295,000) |
< £250,000 | 0% | £0 |
£250,001 – £925,000 | 5% | £2,250 |
£925,001 – £1.5 million | 10% | N/A |
> £1.5 million | 12% | N/A |
SDLT = £2,250 |
SDLT rates from 1st April 2025:
Example:
PROPERTY / LEASE PREMIUM / TRANSFER VALUE | SDLT RATE | (Property worth £295,000) |
< £125,000 | 0% | £0 |
£125,001 – £250,000 | 2% | £2,500 |
£250,001 – £925,000 | 5% | £2,250 |
£925,001 – £1.5 million | 10% | N/A |
> £1.5 million | 12% | N/A |
SDLT = £4,750 |
Impact on first-time buyers (‘FTB’)
If you are thinking of buying your first property, you are also likely to be affected. The SDLT position is being amended as follows:
- The nil-rate threshold for FTB’s will reduce from £435,000 to £300,000; and
- The maximum purchase price for which FTB relief can be claimed will reduce from £650,000 to £500,000.
This means that, if a FTB wants to benefit from the FTB SDLT relief, they will need to purchase a property below £500,000. Further, the FTB would pay no SDLT on the first £300,000, and a standard rate would apply (as outlined above) thereafter.
What should you do?
Whether you are a first-time buyer, looking to move home, or an investor, you should consider whether you are able to progress your property transaction in time to meet the April 2025 deadline, as you could save thousands of pounds in Stamp Duty fees.
Greene & Greene’s Residential Property team can assist in your residential purchase and post-completion SDLT formalities. For further advice please contact a member of our team.
For more information on the services offered by Greene & Greene Solicitors please visit www.greene-greene.com and follow on Twitter @GreeneGreeneLaw.
This is only intended to be a summary and not specific legal advice.