Stamp Duty Land Tax (SDLT) refers to a tax paid when buying property or land.
The amount of tax you pay depends on the value of the property and whether you qualify for exemptions and reliefs prescribed by the Government.
The Autumn Budget made some changes to the ways that stamp duty is calculated, some of which were effective immediately. The budget upheld previous changes that will take effect in April 2025.
The aim of the changes were to reform SDLT, raise revenue and support those buying their first home.
But does this really work in practice?
Second homes: As of October 31, those purchasing their second-home buyers were faced with a rise in SDLT of two percentage points – from 3% to 5%. The rationale was free up housing stock for first time buyers that might otherwise be purchased for investment.
However, there may be ripple effects which take time to fully come into view. Some commentators have warned that rents increase as landlords pass on the higher purchasing costs to tenants.
It could also slow property sales in areas with significant levels of second
home ownership.
First time buyers:
First time buyers currently benefit from SDLT relief on the first £425,000 of their property purchase. However, from April 1st, 2025 the threshold for this relief will reduce to £300,000 and any purchases over £500,000 will not qualify from any relief, with normal rates of SDLT applying to the whole of the transaction.
How do the figures stack up?
These changes will impact affordability for first-time buyers and inevitably have a knock-on effect for the wider property market, with some experts forecasting slow house price growth.
All purchasers:
And it’s not just second homeowners and first-time buyers impacted by the changes to stamp duty.
From April 1st, 2025 the rates applicable to all standard residential purchase transactions will change as the band in which 0% SDLT is payable reduced from £250,000 down to £125,000.
Our advice?
It’s really important to factor in the additional tax liability on prospective house
purchase and also to be realistic about when you expect you purchase to complete i.e. before or after April 1st, 2025 to avoid any unforeseen costs during the conveyancing process.
What does the future hold?
Currently, we can only speculate on the long-term impact of the stamp duty reforms on the property market.
What we do know is that professional services across the property industry are gearing up for the inevitable surge of purchasers looking to complete transactions prior to March 31st, 2025.
Montpellier Legal Tips:
Ensure you instruct your solicitor as early and you are proactive with
completing all required onboarding tasks to get your transaction moving, though do be realistic about timeframes – it usually takes between 8 to 12 weeks to complete the legal work to purchase a property, but this is largely dependent on a number of factors that will be unknown until the legal works starts. Be transparent about your affordability and how the changes could impact your ability to proceed with completion. Planning ahead will be
critical to avoid disappointment.
Katrina Lamont
Chief Legal Operations Officer
In her role as CLOO, Katrina oversees our Legal Teams with a focus on operational strategy and driving targets to optimise performance, ensuring delivery of exceptional service to our clients every time. In line with our Company vision, Katrina promotes a supportive, inclusive culture with her commitment to professional development, helping our staff achieve their goals. With her wealth of experience in management and customer service, Katrina is our designated complaints handler.
As a qualified Solicitor, Katrina also deals with our high value property transactions; her excellent legal knowledge and pragmatic approach ensure all clients receive the best possible service. She has achieved some impressive results, including exchanging in a matter of 2 weeks on a multi-million pound purchase transaction.
Contact Katrina now: info@montpellier.legal | 01242 472200
