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Category: tax
On 1st April 2025, the temporary thresholds on Stamp Duty Land Tax (SDLT) set up by the Conservative government in 2022 are due to expire.
Introduced as part of Jeremy Hunt’s 2022 autumn statement, the current Labour chancellor Rachel Reeves decided not to extend this temporary threshold in her 2024 autumn budget.
As a result, the various criteria for SDLT are resetting to how they were over two years ago. This may cause unforeseen issues because the global economic situation has shifted dramatically since then.
These upcoming changes will affect PRS landlords and people looking to move homes. It will arguably impact first-time buyers most of all, seemingly contradicting Labour’s stated goals of helping young people get onto the property ladder and improving the health of the housing market.
Key changes explained
The 0% (or ‘nil’) threshold will revert from £250,000 to £125,000.
Therefore, buy to let landlords that were previously in the £125k-£250k bracket will soon be paying a further 2% SDLT.
It’s highly likely that SPV (special purpose vehicle) and portfolio landlords will feel the effects of this increased taxation, as they are more likely to cross this reduced tax bracket.
Changes that might affect buy-to-let landlords
Let’s use an example of a property purchase for £300,000:
For a completion on or before 31st March 2025, buyers of an additional property will currently pay 5% on the first £250,000 and 10% on the final £50,000. In this situation, the total SDLT that would be paid is £17,500.
However, on completion after this date, buyers will pay 5% on the first £125,000, 7% on the next £125,000, and 10% on the final £50,000. In this situation, the total SDLT that would be paid is £20,000.
As such, if your purchase price is £250,000 or greater, accelerating a property purchase before the March 31st deadline hits could save you £2,500.
Changes that affect first-time buyers
To showcase the changes that would be made for first-time buyers, let’s use a different example of a property purchase at £350,000.
On completion on or before 31st March 2025, the maximum threshold for first-time property buyers to pay SDLT is £450,000, so there would be no stamp duty to pay.
That changes on 1st April, and any completion after this date will involve the buyer paying 0% on the first £300,000, but 5% on the final £50,000. So, the total SDLT that would be paid is £2,500.
Industry reactions
Ahead of these stamp duty changes, many cornerstones of the housing market are making predictions and taking pre-emptive measures, namely estate agents.
According to a GetAgent survey of over 500 estate agents, 38% of respondents feared the prospect of an increase in fall through rates among property buyers who fail to complete before the 31st March deadline.
Moreover, 47% foresee a drop in transaction levels after the deadline, and 45% see house prices falling.
Many agents are seeing urgency among buyers and landlords hoping to secure property. 15% of agents saw customers offering more than the expected asking prices, purely to hurry along the process and secure their properties faster.
How to get ahead of the curve
The best way to prepare for the stamp duty deadline is to get any outstanding purchases completed as soon as possible.
Of course, it is also important to get a full understanding of how your property and financial situations will look after the changes take effect. Make sure to calculate the impact of the changes if they apply to you.
By getting in touch with a mortgage advisor, you will be able to explore a wider range of lender options, and the advisor may be able to find you one with a speedy approval process. Call our team today.
