In the Autumn Budget 2024, the Labour Government unveiled several key changes to Stamp Duty Land Tax (SDLT), aimed at making the property market more accessible and efficient. Here’s a breakdown of the key changes to SDLT announced in the Budget.

1. Revised Additional Property Tax (APD) Rates

The government has introduced some adjustments to the Additional Property Tax (APT) for buyers purchasing second homes or buy-to-let properties. The current 3% surcharge on second homes will now increase by an additional 2% across all property bands. This means up until 1 April 2025 the rates are as follows:

• Up to £250,000: The total SDLT surcharge will now be 5%.
• Between £250,001 to £925,000: The total SDLT surcharge increases to 10%.
• Between £925,001 to £1.5 million: The surcharge rises to 15%.
• Above £1.5 million: The surcharge will now be 17%.

From 1 April 2025 the 5% surcharge will apply to the  residential property rates at that time being as follows:

• Up to £125,000: The total SDLT surcharge will now be 5%.
• £125,001 to £250,000: The total SDLT surcharge increases to 7%.
• £250,001 to £925,000: The surcharge rises to 10%.
• £925,001 to £1.5 million: the surcharge rises to 15%.
• Above £1.5 million: The surcharge will now be 17%.

This change is designed to slow the demand for second homes and investment properties in a hot housing market, in an effort to free up more stock for main home and first time buyers.

2. Changes to SDLT for Corporate Buyers

The government announced an increase in the SDLT rate for residential properties costing £500,000 or more purchased by companies, by partnerships with at least one corporate member or on behalf of collective investment schemes. The rate increased from 15% to 17% on 31 October 2024.

This rise in SDLT will also apply to collective enfranchisement transactions if at least one of the participating tenants is a non-natural person and the average price per qualifying flat is more than £500,000 will similarly increase from 15% to 17%.

3. Impact of New SDLT Measures

A. For First-Time Buyers

An indirect affect of these changes could benefit the first time buyer since it aims to discourage second home and investment properties. This means that there will be an increased number of homes available to ease the demand. However considering the nil rate threshold will only be available for property transactions up to £300,000 from 1st April 2025 for first time buyers. Any benefit from these measures will likely be offset by the changes coming from 1st April 2025 as it is estimated 80% of first time buyers will have to pay SDLT.

B. For Property Investors

The increase in the Additional Property Tax is likely to lead to higher costs for buy-to-let investors and those purchasing second homes. This might have a cooling effect on the market for investment properties, although the rise is incremental and unlikely to result in an immediate sharp decline.

If you would like to discuss this article further,  please contact James Mackay.

Further information is also available on our main Residential Property and Commercial Property pages.

For the latest information about Stamp Duty Land Tax rates, please click here to access the UK Government website.

And here is a direct link to the UK Government Stamp Duty calculator.