Stamp Duty Changes Increase Costs for Home Buyers

Massive changes to Stamp Duty are coming into effect later this year and for those thinking of moving home, this additional expense needs to be taken into consideration.

In the recent UK Budget, significant changes to Stamp Duty Land Tax (SDLT) were announced, set to take effect on April 1, 2025. These adjustments are poised to impact both first-time buyers and existing homeowners in Ormskirk, Southport, Wigan, Burscough, Liverpool and across the North West.

Key Changes to Stamp Duty:

  1. Reduction of the Nil-Rate Band:
  • Current Rule (until March 31, 2025): No SDLT is payable on the first £250,000 of the property’s purchase price.
  • From April 1, 2025: The nil-rate threshold will revert to £125,000. A 2% SDLT will apply to the portion of the purchase price between £125,001 and £250,000.
  1. First-Time Buyer Relief:
  • Current Rule (until March 31, 2025): First-time buyers pay no SDLT on properties up to £425,000, with relief applicable on properties priced up to £625,000.
  • From April 1, 2025: The nil-rate threshold for first-time buyers will decrease to £300,000, and the maximum property value eligible for relief will drop to £500,000.
  1. Additional Property Surcharge:
  • From October 31, 2024: The SDLT surcharge for additional residential properties, such as second homes and buy-to-let investments, increased from 3% to 5% above standard rates.

Implications for Homebuyers:

  • Increased Upfront Costs: The reduction in the nil-rate band means that buyers will face higher SDLT liabilities. For instance, purchasing a property at the average price of £421,148 in Ormskirk will incur higher SDLT charges after April 1, 2025.
  • First-Time Buyers: The lowered thresholds for relief may result in increased costs. For example, a first-time buyer purchasing a property at £500,000 will see their SDLT liability rise from £3,750 to £10,000 after the changes take effect.
  • Market Dynamics: Anticipation of these changes may lead to a surge in property transactions before the April deadline, potentially driving up prices in the short term. Conversely, a slowdown may occur post-implementation as buyers adjust to the new tax landscape.

Further information can be found on the Stamp Duty Calculator on the government website.

Strategies for Prospective Buyers:

  • Accelerate Purchase Plans: Completing property transactions before April 1, 2025, can result in substantial SDLT savings. Given that the average property transaction can take 12 to 16 weeks, initiating the process promptly is advisable.
  • Financial Preparation: Ensure that mortgage arrangements and necessary documentation are in order to facilitate a swift transaction.
  • Consult Professionals: Engage with local estate agents and financial advisors to navigate the complexities of the local property market and the impending SDLT changes effectively.

We at Dickinson Parker Hill Solicitors in Ormskirk have been advising people on residential property sales and purchases for over 200 years. Our experienced team of conveyancers have excellent relationships with local estate agents, mortgage brokers and financial advisors and we can guide you through the process to help make it as easy as possible.

Please call our offices on 01695 574 201 / 01704 504 381 or email us. One of our experienced conveyancers will get back to you to discuss your requirements.