Significant changes to Stamp Duty Land Tax (SDLT) are set to take effect on 1st April 2025, affecting residential property transactions. These adjustments will impact first-time buyers, home movers, and investors. Whether you’re looking to buy your perfect home or considering selling, it’s crucial to understand the impact these changes are going to have. Here’s a breakdown of what’s changing and how you can prepare:
Reduction in Nil-Rate Band for Main Residences
Currently, no SDLT is payable on main residence purchases up to £250,000, but this threshold is going to decrease to £125,000, meaning that properties priced between £125,001 and £250,000 will have a 2% SDLT rate. Consequently, more buyers will have to pay SDLT, even on lower-priced homes. This change could make moving more expensive, especially for those with mid-range budgets.
Changes for First-Time Buyers
First-time buyers currently benefit from SDLT relief on properties up to £425,000, with a maximum property value of £625,000 to qualify for this relief. From April, the relief threshold will decrease to £300,000, and the maximum property value eligible for relief will decrease to £500,000. This means there’ll be a sharp rise in costs for first-time buyers purchasing properties above £300,000 and they will face higher SDLT liabilities. If you’re saving for your first home, it’s worth factoring in this cost.
Increased Rates for Additional Property Purchases
Investors and individuals purchasing additional properties used to pay a 3% surcharge on top of standard SDLT rates, which increased to 5% on 31 October 2024. From April 2025, the rates for additional properties will be:
- Properties up to £125,000 = 5% surcharge
- £125,001 to £250,000 = 7% surcharge
- £250,001 to £925,000 = 10% surcharge
- £925,001 to £1.5 million = 15% surcharge
- Above £1.5 million = 17% surcharge
Investors will need to carefully weigh the higher costs against potential rental returns.
What Does This Mean for You?
These changes are expected to influence buyer behaviour, potentially leading to a surge in property transactions before the April 2025 implementation date as buyers aim to avoid higher SDLT costs. First-time buyers and investors may expedite purchases to benefit from the current SDLT rates.
Considerations
If you’re buying, consider accelerating your purchase to avoid the higher SDLT rates. Consult a conveyancing solicitor to help you fast-track your transaction.
If you’re selling, early 2025 could be a good time to list your property. Increased buyer activity could drive up competition, and potentially prices.
In you’re an investor, consider reassessing your portfolio. The higher SDLT rates could impact your profitability, so factor this into your long-term strategy.
The 2025 SDLT changes are a significant shift, but with careful planning, you can navigate them successfully. Whether you’re buying, selling, or investing, professional advice is essential to help you make informed decisions. Don’t hesitate to contact our experienced Residential Conveyancing team on 01753 486 777.