SDLT Changes as a result of the Autumn Budget 2024
By Ben Eaton
The Autumn Budget 2024 brought significant changes to Stamp Duty Land Tax (SDLT), aimed at addressing challenges in the property market and increasing government revenue. These adjustments, effective from 31st October 2024, impact the affordability of property by introducing higher costs for buyers of second homes, buy-to-let properties, and companies purchasing residential properties. Here’s what you need to know and how it might impact the property market.
Key SDLT changes
Increased higher rates for additional properties:
• The SDLT surcharge for individuals, companies and other "non-natural persons" purchasing additional residential properties such as second homes or buy-to-lets, has risen from 3% to 5% (“the additional dwellings surcharge”).
• Companies and other "non-natural persons" buying residential property not for commercial use now face a rate increase from 15% to 17%.
Transitional rules:
• For transactions where contracts were exchanged before 31st October 2024 but completed on or after this date, the pre-Budget 3% surcharge will apply.
• However, variations or reassignments of such contracts may subject them to the new rates.
SDLT Nil-rate threshold
• From 1st April 2025, the nil-rate threshold reverts to £125,000 (currently £250,000).
First-Time Buyer Relief ending:
• Temporary increase in SDLT relief for first-time buyers will not continue when they expire on 31st March 2025.
• The first-time buyer threshold will drop £300,000 (currently £425,000.00) and there will be a charge of 5% SDLT on the portion from £300,001 to £500,000.
Potential impact of SDLT changes on the property market
Landlords and investors:
The increased SDLT surcharge raises upfront costs for buy-to-let investors, potentially deterring new entrants to the market. This could exacerbate the already limited supply of rental properties, pushing rents higher.
Private rental sector challenges:
Combined with the proposed Renters’ Rights Bill, these changes might discourage investment in the rental sector, creating unintended consequences such as a housing supply crunch and affordability issues for tenants.
First-time buyers:
The return to pre-2022 thresholds from April 2025 will increase the tax burden on first-time buyers. With rising interest rates and house prices, affordability challenges could intensify.
What should property buyers be considering?
Transaction timing:
Buyers who exchanged contracts before 31st October 2024 but are completing after should carefully review the transitional rules to confirm their SDLT liability.
Strategic planning for investors:
Landlords and investors may need to reconsider their strategies in light of higher acquisition costs and rental market dynamics.
Preparation for first-time buyers:
Prospective first-time buyers should aim to complete purchases before the relief expires on 31st March 2025 to benefit from higher nil-rate thresholds.
Expert property legal advice
Whether you're a buyer, investor, or landlord, planning ahead and seeking expert advice as a result of the changes to SDLT will be key. For tailored guidance on your property transactions, the Property Law team at Ralli Solicitors LLP are here to help. Contact our Manchester office on 0161 832 6131 or our London team on 0207 535 0750, or you can email enquires@ralli.co.uk, and one of our team will respond.