A third of homes for sale on Zoopla are currently chain-free (32%), suggesting that landlords are continuing to exit the market.
On the other side of the fence, First-time buyers and homebuyers are racing to purchase their next home before Stamp Duty Land Tax relief thresholds are reduced on 31st March 2025. As the relief period comes to an end, landlords are eager to take advantage of this heightened demand.
Sam Dewes, Private Client Partner at HW Fisher commented “The Chancellor has increased the surcharge on second homes from 3% to 5%, discouraging potential new landlords from entering the sector and deterring existing ones from further investment.
Many landlords have already exited the market due to tax and regulatory costs. Those in the process of selling will be looking to complete their deals by 31 March 2025 in case the reduction in SDLT thresholds jeopardises the transaction.”
Impact of SDLT relief reversal on first-time buyers
For first-time buyers, a special nil-rate threshold applies for properties that do not exceed the maximum purchase price. At present, the special nil-rate threshold is £425,000 and the maximum purchase price is £625,000. However, from 31 March 2025, these will reduce to £300,000 and £500,000 respectively. For a first-time buyer purchasing a house in England for £425,000, they will be worse off by £6,250.
In the table below, we compare current SDLT rates for UK residents when purchasing their first residential property with what they will pay from 31st March 2025.
| Purchase Price Band
|
Current First Time Buyer Rates until 31st March 2025 | First Time Buyer Rates from 31st March 2025 |
| Up to £300,000 | 0% | 0% |
| £300,001 to £425,000 | 0% | 5% |
| £425,001 to £500,000 | 5% | 5% |
| £500,001 to £625,000 | 5% | Standard rates apply to whole purchase price |
| £625,001 + | Standard rates apply to whole purchase price | Standard rates apply to whole purchase price |
Impact of SDLT relief reversal on homebuyers
For a homebuyer, excluding first-time buyers, the general nil-rate threshold will reduce from £250,000 to £125,000 from 31st March 2025. For those acquiring a house for £350,000, this change will give rise to an SDLT bill of £7,500 – an increase of £2,500 over the current residential rates. The same increase will apply to all purchases in excess of £250,000.
In the table below, we compare current rates of SDLT for UK residents on a standard residential purchase when replacing a main residence with what they will pay from 31st March 2025.
| Purchase Price Band
|
Current Standard Residential Rates until 31st March 2025 | Standard Residential Rates from 31st March 2025 |
| Up to £125,000 | 0% | 0% |
| £125,001 – £250,000 | 0% | 2% |
| £250,001 – £950,000 | 5% | 5% |
| £950,001 – £1,500,000 | 10% | 10% |
| £1,500,000 + | 12% | 12% |
Impact of increased surcharge on second homebuyers
Following the announcement at the Autumn Statement, second homebuyers, including landlords, purchasing residential properties costing over £40,000 now are liable for a 5% SDLT surcharge.
In the table below, we compare previous rates of SDLT for UK residents on a second home purchase prior to 31st October 2024 with what they will now have to pay following the change.
| Purchase Price Band | Previous Residential Rates | Residential Rates from 31 Oct 2024 (with change from 31 March 2025 in brackets) |
| Up to £125,000 | 3% | 5% |
| £125,001 – £250,000 | 3% | 5% (7%) |
| £250,001 – £925,000 | 8% | 10% |
| £950,001 – £1,500,000 | 13% | 15% |
| £1,500,000 + | 15% | 17% |
If you are interested in finding out more, please contact Sam Dewes.
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