F&F LLP UKRE team update on upcoming changes to Stamp Duty Land Tax (SDLT) in England

As a gentle reminder from our UK Real Estate (UKRE) team, significant changes to Stamp Duty Land Tax (SDLT) in England are set to take effect from 1 April 2025. These changes will have notable implications for both buyers and sellers in the property market. Below, we outline the key updates and their potential impacts.

Key Changes

Threshold Adjustments

One of the primary changes involves adjustments to the SDLT thresholds. The nil-rate band for standard property purchases will revert from £250,000 to £125,000. This means that buyers will now pay SDLT on properties valued above £125,000, rather than the previous threshold of £250,000. For first-time buyers, the nil-rate band will decrease from £425,000 to £300,000, making it more challenging for them to avoid paying SDLT on higher-value properties.

Rate Increases

In addition to the threshold adjustments, there will be increases in the SDLT rates. Standard rates will be applied as follows: a 2% rate on property values between £125,001 and £250,000, and a 5% rate on values between £250,001 and £925,000. Furthermore, buyers of additional properties, such as second homes or investment properties, will face higher rates due to a 2% surcharge on top of the existing rates.

Impacts

Increased Costs

These changes will result in higher upfront costs for buyers. First-time buyers, in particular, will now have to pay SDLT on properties valued over £300,000, which could make it more difficult for them to enter the property market. Investors and buyers of additional properties will also experience increased costs due to the higher surcharge, potentially affecting their investment decisions.

Market Activity

The impending changes are likely to influence market activity in the months leading up to April 2025. We may see a surge in transactions as buyers rush to complete their purchases under the current rates, aiming to avoid the higher costs. However, once the new rates take effect, the market could experience a slowdown. Higher costs may reduce demand, leading to longer selling times and potentially lower property prices.

Regional Differences

The impact of these changes will vary across different regions. Areas with higher property values, such as London and the Southeast, are expected to feel the effects more acutely. Buyers in these regions will face significantly higher SDLT costs, which could influence their purchasing decisions and overall market dynamics.

What’s Next

For those planning to buy property, it is advisable to complete your purchase before April 2025 to take advantage of the current SDLT rates and potentially save thousands of pounds. Sellers may find that the early months of 2025 present an opportunity for quicker sales or higher offers due to increased buyer activity.

Planning ahead and seeking professional advice will be crucial to navigating these changes effectively. If you need further information or legal advice, including conveyancing services in England, please contact our dedicated UKRE team: Anna Douglass, Alastair Hargreaves, Caren Vidamour, and Hannah Damant, who will be delighted to assist.