The property market is a very important part of the economy of any country. It can make a substantial contribution to a country’s revenue. It can also create economic bubbles if it overheats, hence damaging or even crashing an economy. Therefore, all responsible governments want to regulate the property market effectively. One tool in their armoury that they frequently use to do this is stamp duty land tax (SDLT).
With this in mind, the Labour government made a headline announcement on 30th October 2024 that the higher SDLT rate for purchases of additional dwellings and for purchases by companies was increased from 3% to 5% above the standard rates from 31st October 2024. The SDLT rate for residential purchases by companies and other non-natural persons over £500,000 was also increased from 15% to 17% from the same day.
In fact, in addition to the above announced changes, there are also other unannounced changes on SDLT, which will take effect from 1st April 2025, on which this article will focus on.
Stamp Duty Land Tax (SDLT) changes from 1st April 2025
- The temporary increases to thresholds are coming to an end: Threshold will drop to £300,000 for a first-time buyer (previously £425,000)
- Nil rate threshold will return to £125,000 (previously £250,00)
- Maximum purchase price for which First-Time Buyers Relief can be claimed is £500,000, meaning that if your property is over £500,000 you would not be able to claim relief
| Property value | SDLT rate |
|---|---|
| Up to £250,000 | 0 |
| Next £675,000 (from £250,001 to £925,000) | 5% |
| The next £575,000 (from £925,001 to £1.5 million) | 10% |
| The remaining amount (above £1.5 million) | 12% |
| Property value | SDLT rate |
|---|---|
| Up to £125,000 | Zero |
| Next £125,000 (from £125,001 to £250,000) | 2% |
| Next £675,000 (from £250,001 to £925,000) | 5% |
| Next £575,000 (from £925,001 to £1.5 million) | 10% |
| The remaining amount (above £1.5 million) | 12% |
Example
1. A first-time buyer buys a house for £350,000. The SDLT owed will be:
- Rates up to 31 March 2025: The SDLT you owe will be £0
- Rates from 1 April 2025: The SDLT you owe will be £2,500
2. A first-time buyer buys a house for £500,000. The SDLT owed will be:
- Rates up to 31 March 2025: The SDLT you owe will be £3,750
- Rates from 1 April 2025: The SDLT you owe will be £10,000
What should I do?
A standard freehold transaction is 6 to 8 weeks. A leasehold on average takes 8 to 10 weeks. If you are looking for a property and would like to benefit from the current rates, which means completing on or before 31 March 2025, you can communicate your intention to your buyer, seller and agents. You can come to a mutual understanding about the completion date at the start of the transaction. Vacant properties or ones not in a chain would reduce the risk.
However, property purchase is complicated, and the timeline can be affected by a multitude of factors – but coming to a mutual agreement would certainly help the other side to be “on side”!
Contact us now for assistance with your property purchase.
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