Stamp Duty Changes: What buyers and sellers need to know
Melisa
As of today, the 1st of April 2025, significant changes to Stamp Duty Land Tax (SDLT) have come into effect in England and Northern Ireland. These updates will impact property buyers and sellers alike, reshaping the financial landscape of real estate transactions. Here’s a breakdown of what has changed and how it might affect you moving forward.
What has changed?
The government has lowered the thresholds at which stamp duty applies, meaning more property transactions will now incur higher costs:
- For Main Residences:
- The nil-rate threshold has dropped from £250,000 to £125,000.
- New SDLT rates:
- Up to £125,000: 0%
- £125,001–£250,000: 2%
- £250,001–£925,000: 5%
- £925,001–£1.5 million: 10%
- Over £1.5 million: 12%
- First-Time Buyers:
- The nil-rate threshold has reduced from £425,000 to £300,000.
- First-time buyers purchasing properties between £300,001 and £500,000 will now pay 5% SDLT on the portion above £300,000.
- Relief is no longer available for homes priced above £500,000 (previously capped at £625,000).
- Additional Properties:
- Investors and buyers of second homes face higher rates:
- Up to £125,000: 5%
- £125,001–£250,000: 7%
- £250,001–£925,000: 10%
- Over £925,001: Higher rates apply
- Investors and buyers of second homes face higher rates:
Implications for buyers
- Higher costs: Many buyers will need to budget for increased SDLT liabilities. For example: A first-time buyer purchasing a property worth £375,000 will now pay £3,750 in stamp duty compared to zero under the previous rules.
- Regional impact: Areas with higher average property prices (e.g., London and the South East) will feel the squeeze more acutely as fewer properties fall within tax-free thresholds.
- Budget adjustments: Buyers may prioritise properties below new thresholds or reconsider upsizing plans due to higher transaction costs.
Impact on sellers
- Pricing strategy: Sellers may need to strategically price their properties just below SDLT thresholds to attract buyers and minimise their tax liabilities. For instance, pricing a home at £299,999 rather than £300,001 could save buyers thousands in SDLT.
- Market dynamics: Higher transaction costs could dampen demand in certain price brackets or regions, potentially slowing sales activity.
What can you do?
- Plan ahead: Whether buying or selling, understanding the new SDLT rates is crucial for budgeting and decision-making.
- Seek advice: Consult a mortgage broker like the Zest Money Group to help you navigate your finances
- Act strategically: Buyers should use stamp duty calculators to estimate costs under the new rules. Sellers might consider adjusting their asking prices to align with buyer affordability.
These changes mark a significant shift in the property market. While they aim to generate government revenue amidst economic challenges, they also introduce new complexities for buyers and sellers alike. At Oakheart Property, we’re here to guide you through these updates—contact us today for expert advice tailored to your needs!
