Key changes to second-home Stamp Duty: what you need to know
Last Updated: 06-11-2024
Reading Time: 6 minutes
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Rachel Reeves announced raises to Stamp Duty for second home/investment properties in her recent Budget. This overview outlines those changes and should help you work out how much you’ll need to save.
Surcharge on second homes and investment properties
As of October 31st, 2024, the Stamp Duty Land Tax (SDLT) surcharge on second homes and investment properties has risen. Each tier stood at 3% above standard residential rates. They are now 5% above standard residential rates.
The higher rates up to 31 March 2025, then from 1 April 2025
The higher rates from 31 October 2024 to 31 March 2025:
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | 5% |
| The next £675,000 (the portion from £250,001 to £925,000) | 10% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 15% |
| The remaining amount (the portion above £1.5 million) | 17% |
The higher rates from 1 April 2025:
| Property or lease premium or transfer value | SDLT rate |
| Up to £125,000 | 5% |
| The next £125,000 (the portion from £125,001 to £250,000) | 7% |
| The next £675,000 (the portion from £250,001 to £925,000) | 10% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 15% |
| The remaining amount (the portion above £1.5 million) | 17% |
These new rates are intended to slow down the purchases of additional properties. However, they could impact people in the process of selling their first property after acquiring their new main residence.
The Treasury perspective is that the move would give first-time buyers and home movers an advantage over second-home buyers and landlords.
Who does the surcharge on second homes and investment properties impact?
Here’s who is impacted by the raises, and who isn’t:
- Anyone buying an additional residential home or investment property will face the higher rate
- Important: this includes anyone who’s bought a new home, but hasn’t yet sold their previous primary residence;
- However, people who have signed contracts before October 31st, 2024 can still benefit from the old rate if certain rules are met.
Did you sign a contract before October 31, 2024?
If you did, you’ll incur no surplus if there are:
- no major changes to the contract after October 30th, 2024;
- no added clauses or rights assigned to someone else.
Effective Dates & Rates
- Contracts with completion between October 31st, 2024, and March 31st, 2025:
- The higher rates will apply at 3% above the current residential rates that apply between 23rd September 2022 and 31st March 2025.
- Contracts completing after April 1st, 2025:
- The new 5% surcharge rate will apply to the permanent residential rates.
A rough example of what the change means:
For a second home costing £200,000, the stamp duty will now be £10,000 at the new 5% rate, up from £6,000 at the previous 3% rate. This increase in SDLT could impact anyone buying an additional property after October 31st, 2024, so plan ahead and consult with a mortgage specialist if you’re in the process of buying an additional property.
Still not sure?
If this all sounds more complicated than it should be, I’d have to agree. But our Stamp Duty calculator can cut through the waffle. You can find it at the bottom of this blog post or open it up on our dedicated Stamp Duty calculator page.
The calculator will help you see at-a-glance how much you’ll need to save for SDLT when you buy your new property.
If you’re still unsure, simply call one of our brokers. They’ll run through your information with you and work out how much Stamp Duty you’ll pay based on the property you have in mind.
First-time-buyers stamp duty relief and threshold reverting back to previous levels from 31 March 2024
It’s worth adding a note about first-time buyers’ Stamp Duty. They’ll be hit by the government’s decision not to extend the relief on stamp duty for people buying their first home.
Back in 2022, the Conservatives raised the threshold for when first-time buyers pay stamp duty from £300,000 to £425,000. They also raised the threshold for other buyers from £125,000 to £250,000.
These rates are good until March 31st, 2025. After that, they will revert back to normal, meaning first-time buyers will pay what everyone else pays.
Rates up to 31 March 2025
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Rates from 1 April 2025
| Property or lease premium or transfer value | SDLT rate |
| Up to £125,000 | Zero |
| The next £125,000 (the portion from £125,001 to £250,000) | 2% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
This is more straightforward than SDLT for second homes. But, if you’re unsure, reach out. We’ll help you with your figures and answer your questions as best we can. Good luck.
Stamp Duty calculator:
John Yerou is the owner and founder of the award-winning Mortgage Quest Ltd and its subsidiary brands.
In 2004, John began his career in financial services as an independent mortgage advisor and broker. He's since been instrumental in negotiating bespoke mortgage underwriting criteria for professional contractors with many high street lenders.
As such, John's one of the most respected and recognisable names in securing mortgages for the UK's flexible workforce, incorporating independent professionals and the self-employed.
His recognition as the go-to mortgage expert has grown exponentially, reflected in citations and his own publications in both national and contractor-oriented press.
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on November 5th, 2024 11:38am in Latest mortgage news & opinions.
