Following Labour’s first budget since 2010, the Chancellor has introduced an increase in Stamp Duty Land Tax (SDLT) rates that will impact both buyers of second homes and property investors. This blog takes you through the upcoming changes, the potential financial impacts, and how our Residential Property team can support you in navigating these developments.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax, commonly known as SDLT, is a tax levied by HM Revenue & Customs on property and land purchases in England. SDLT is calculated as a percentage of the property purchase price, but the rate varies depending on several factors, such as the property’s purpose and the buyer’s ownership status. The SDLT rate for first-time buyers, for example, differs from the rate applied to second-home buyers or companies purchasing property.
At its core, SDLT is a tiered tax, meaning different portions of a property’s price are taxed at progressively higher rates. For buyers who are entering the property market or looking to expand their investment portfolio, the changes introduced in the autumn budget will be important to understand.
Key Changes to Stamp Duty Land Tax in the Autumn Budget 2024
The new budget has introduced several adjustments to SDLT, most notably an increase in the surcharge on second homes and buy-to-let properties. These changes will take effect on 31 October 2024, and property buyers will need to consider these updates as they plan their transactions:
- Second Homes, Buy-to-Let, and Company Purchases: The SDLT surcharge for these categories will increase from 3% to 5%. For example, if you’re buying a second home valued at £300,000, you would now pay an SDLT rate of 10% on the amount above £250,000, instead of the previous 8%.
Below is a breakdown of the new rates for second homes and investment properties:
| Property Value | SDLT Rate on Second Homes & Investment Properties |
| Up to £250,000 | 5% |
| £250,001 to £925,000 | 10% |
| £925,000 to £1.5 million | 15% |
| Over £1.5 million | 17% |
These changes increase the cost of investing in second properties, potentially affecting the affordability of buy-to-let and investment purchases. It’s crucial for investors to assess these rates carefully when budgeting for future purchases.
Standard Rate SDLT Thresholds: What to Expect After March 2025
Another key update relates to the temporary increase in SDLT thresholds for main residences, introduced in September 2022. The threshold increase allowed buyers to enjoy reduced SDLT costs on purchases up to £250,000. However, this temporary change is scheduled to expire on 31 March 2025, after which SDLT rates will revert to pre-2022 levels.
For property transactions completed after 31 March 2025, here’s what the SDLT rates will look like for main residences:
| Property Value | SDLT Rate on Main Residence |
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Over £1.5 million | 12% |
This reversion may lead to an increased cost for buyers purchasing properties above £125,000 after the threshold expires. Buyers who are in the process of purchasing or planning to buy a home might consider timing their transactions accordingly to benefit from the current rates before March 2025.
First-Time Buyers: Changes to Relief Thresholds
The autumn budget will also impact first-time buyers by reducing the SDLT relief thresholds. From 31 March 2025, the relief threshold will return to its previous level of £300,000, down from the current £625,000. For those purchasing their first home, the SDLT rates after this date will be as follows:
| Property Value | SDLT Rate for First-Time Buyers |
| Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% |
For example, if you’re a first-time buyer purchasing a property priced at £350,000 after March 2025, you’ll pay SDLT of £2,500, whereas under the current threshold, this purchase would incur no SDLT. This change means first-time buyers will need to factor in additional SDLT costs for properties above £300,000 after the threshold reverts.
Implications for Property Buyers and Investors
The Chancellor’s announcements signal the government’s intention to cool certain segments of the property market by increasing the financial commitment required for second-home and investment property purchases. For buyers planning to invest in property for the long term, these SDLT changes may influence purchase decisions, while first-time buyers will need to budget for potential SDLT liabilities that were previously exempt.
If you’re considering a property purchase, here are some questions to consider:
- Is this your first property, or are you investing in a second home? Understanding your buyer status will help you determine the applicable SDLT rate.
- Will your purchase complete before or after the March 2025 deadline? Buyers may wish to accelerate their transactions to benefit from the current SDLT thresholds.
- Are you purchasing within the new thresholds for first-time buyer relief? Knowing the threshold limits is essential to avoid unexpected SDLT expenses.
How We Can Support You
Purchasing property, whether as a first-time buyer or an investor, involves financial commitments that require careful planning. At Slater Heelis, our Residential Property team is ready to guide you through the changes to stamp duty land tax, helping you make well-informed decisions. We stay abreast of policy updates and understand how market shifts affect both buyers and sellers.
If you have questions about SDLT or would like to speak to a member of our team, please get in touch by filling out our online contact form or by giving us a call on 0330 111 3131.