Stamp Duty is changing, but what does this mean for aspiring homebuyers?

First time buyers most affected by changes to Stamp Duty Land Tax

As of April 1st 2025, the government will implement significant changes to Stamp Duty, or Stamp Duty Land Tax (SDLT). Although all homeowners will be impacted by the updates, unfortunately, first time buyers will be affected the most.

These changes, announced in the Autumn Budget 2024, mark the end of the temporary thresholds that were introduced in September 2022 to stimulate the housing sector.

What is Stamp Duty?

Stamp Duty is a tax homebuyers must pay the government when purchasing a property or land over a certain price bracket.

The amount of tax you must pay is dependent on a number of factors including (but not limited to):

• How much you pay for the property.
• When you purchase the property.
• Whether you’re purchasing your first property, moving home or buying an additional property.
• Whether you’re a UK resident.
• Whether you’re purchasing the property as an individual or company.
• Whether you’re eligible for SDLT relief or an exception.

Why are the Stamp Duty rates changing?

The current temporary Stamp Duty threshold was introduced by the Conservative Government in the Autumn Statement in September 2022, reducing the upfront costs of buying a property to help make homeownership more achievable. The aim was to strengthen the housing market, protect associated jobs and businesses, and help aspiring homeowners enter the property market.

However, the new Labour government made the decision to end the existing SDLT exceptions following their win in the 2024 election. Chancellor Rachel Reeves presented these Stamp Duty changes as part of her first Autumn Budget in October last year.

How will the changes to Stamp Duty affect first time buyers?

If you’re looking to buy your first property, you’re probably wondering how these changes will affect you.

Regrettably, first time buyers will see the steepest increase in the changes to the amount of Stamp Duty they will need to pay when purchasing a property. At present, as a first time buyer you’ll pay zero Stamp Duty fees under the SDLT thresholds on the first £425,000 of a property worth up to £625,000.

However, when the new rates come into effect, the threshold will reduce to £300,000 for homes valued up to £500,000. As an example, this means that from April 2025, buyers who are purchasing their first property will go from paying zero Stamp Duty fees on a home worth £425,000 to paying £6,250.

Current Stamp Duty Land Tax rates (Until March 31^st 2025)

First time buyers pay:

• 0% SDLT up to the value of £425,000.
• 5% SDLT on the remaining property portion from the value of £425,001 to a maximum of £625,000.

Example: For a first time buyer purchasing a property in England valued at £525,000, the amount of SDLT you owe would be as follows:

• 0% on the first £425,000 = £0.
• 5% on the remaining £100,000 (i.e. £525,000 – £425,000) = £5,000.
• Therefore, the total SDLT amount would be £5,000.

The new Stamp Duty Land Tax rate (From April 1^st 2025)

First time buyers will pay:

• 0% SDLT up to the value of £300,000.
• 5% SDLT on the remaining property portion from the value of £300,001 to a maximum of £500,000.

Example: A first time buyer purchasing a property in England valued at £525,000, the amount of SDLT you owe would be as follows:

• 0% on the first £300,000 = £0.
• 5% on the remaining £225,000 (i.e. £525,000 – £300,000) = £11,250.
• Therefore, the total SDLT amount would be £11,250.

For UK residents who are non-first time buyers and are currently selling, or have previously sold, their home and will only own one property:

• 0% SDLT up to the value of £125,000.
• 2% on the next £125,000 (the portion of the amount between £125,001 and £250,000).
• 5% on the next £675,000 (the portion of the amount between 250,001 and £925,000).
• 10% on the next £575,000 (the portion of the value amount between £925,001 and £1.5 million).
• 12% on the remaining property portion above £1.5 million.

Example: A non-first time buyer purchasing a property in England valued at £525,000, the amount of SDLT you owe would be as follows:

• 0% on the first £125,000 = £0.
• 2% on the second £125,000 = £2,500.
• 5% on the final £275,000 = £13,750.
• Therefore, the total SDLT amount would be £16,250

While it’s frustrating that these changes will have the greatest impact on aspiring home buyers, it’s important to stay hopeful – there are still some great home-buying options available to help you achieve your homeownership dreams.

You can calculate how much Stamp Duty Land Tax you will need to pay including rates for additional properties and non-UK residents here.

Should first time buyers try to buy before the new Stamp Duty rates come into effect?

While there are clear benefits to buying a property before April 1st 2025, accelerating your purchase depends on your personal circumstances. Buying your first home is a significant decision and should always be done with thought and consideration, therefore, it’s important not to rush this important life decision.

Potential buyers should assess their financial positions and if the conditions are right, could consider expediting their purchasing timelines to benefit from the current first time buyer threshold. However, the deadline is fast approaching and depending on the property you’re buying and where you are in the process, it may not be possible to meet this deadline. We would therefore recommend speaking with the relevant financial advisors, conveyancing professionals and housing provider/sales agent who can provide tailored guidance to navigate the process effectively.

At Share to Buy, we make your choice easier with a selection of new-build homes across England, available through alternative homeownership schemes such as Shared Ownership, Deposit Unlock and Rent to Buy. Get your home-buying journey underway using our property portal.