Househunters are expected to step up the search for their ideal home after changes to stamp duty were unveiled by the Chancellor in the Autumn Budget.
Rachel Reeves announced that, from March 2025, first-time buyers will pay Stamp Duty Land Tax (SDLT) on any property worth more than £300,000.
As a result, one of the UK’s biggest lenders, Nationwide, predicted that house sales will ‘jump’ as people try to buy properties before the rise comes into effect.
In addition, the stamp duty on second homes increased from 3% to 5%. This came into effect on October 31 2024, the day after the Budget, and will affect anyone looking to invest in a second property or land.
The duty must be paid by people buying a property or a piece of land over a certain price in England and Northern Ireland. So, what does the rule change mean for potential buyers? Read our guide to help you plan for buying a new build home…
Is stamp duty changing?
Stamp duty in England is changing following the Autumn 2024 Budget announcement, primarily affecting second homes and buy-to-let property purchases.
The amount of stamp duty to be paid depends on the cost of the property, whether it will be used for residential purposes, and whether a person owns another property.
Second home buyers and buy-to-let residential properties face a stamp duty land tax surcharge (SDLT) rise from 3% to 5%, which came into effect on October 31 2024.
The Treasury said the move would give first-time buyers and those looking to move house an advantage over second-home buyers and landlords. It said that would result in 130,000 additional transactions over the next five years.
Stamp duty thresholds, the levels at which buyers begin to pay property purchase tax, will fall from spring 2025.
Currently, the threshold at which buyers must pay the stamp duty is £250,000, which means that properties below that amount are exempt. This was increased from £125,000 in 2022. In the same year, the threshold for first-time buyers was increased from £300,000 to £425,000.
The new stamp duty thresholds will revert to lower levels from April 1 2025 and will mean:
First-time buyers will be spared from paying stamp duty up to £300,000 – if the total property price is no more than £500,000.
What is stamp duty?
According to the government, you must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.
Buyers must pay the tax when they:
The tax starts to apply when a threshold is reached - you don’t need to pay if the property you buy is less than the threshold. The current thresholds apply up to March 31 2025 when buying a property that costs:
The buyer has 14 days to pay SDLT from the date of completion, or could be fined or charged interest on the tax owed.
More information about stamp duty is available on the government’s website here.
Second homes stamp duty changes?
The rise in stamp duty from 3% to 5% of the purchase price, which came into effect the day after the Autumn Budget, is expected to impact those buying second properties.
According to HM Revenue and Customs, increasing the higher rates of stamp duty when buying residential property is expected to ‘disincentivise’ the acquisition of second homes and buy-to-let properties, freeing up housing stock for main home and first-time buyers.
However, there are concerns that the move could affect rental property availability if landlords choose not to make further investments, potentially limiting supply and hiking rental prices.
Do first-time buyers pay stamp duty?
First-time buyers currently have a threshold of £425,000, which increased from the previous figure of £300,000. Both thresholds will end in March 2025, reverting to the previous stamp duty levels.
The market anticipates a flurry of interest in the winter from buyers wanting to beat the stamp duty deadline, hoping to get more for their money, especially in areas with higher property prices, such as London and the South of England.
The national average asking price of a first-time buyer property is £227,191, according to Rightmove - a figure that varies across regions.
£3bn in guarantees for SME housebuilders?
Grace Homes has also noted the £3bn in housing guarantee schemes for small and medium-sized enterprise (SME) housebuilders, announced in the Autumn Budget.
This is part of a wider strategy to address the housing shortage by enabling SME developers to access lower-cost loans, reducing the financial barriers that can often hold back smaller firms. We hope that measures like this will encourage more new housing projects and help with supporting the government’s target to build 1.5m homes in the next five years.
Why choose Grace Homes?
If you’re one of the househunters stepping up your search for the perfect property this winter and are interested in a new build or conversion home, look at the beautiful properties that Grace Homes has to offer.
We use our trademark meticulous attention to detail to ensure each of our properties is completed to an extremely high standard, with an array of energy efficient features.
Be inspired with a visit to one of our show homes. To find out more about booking a viewing please call 01536 740019 or email [email protected].