Thinking of Buying a...

Key Stamp Duty Changes for Second Homes

Starting October 31, 2024: The Stamp Duty surcharge for second homes and buy-to-let properties is increasing. If you’re buying a second property, here’s what this means:

• Previous surcharge: Buying a second property currently includes an additional 3% on top of the standard Stamp Duty rates.
• New surcharge: From October 31, 2024, the surcharge will increase to 5%. So, if you’re planning to expand your portfolio or buy a holiday home, it’s important to factor in these extra costs.

Planning Your Move? Timing Is Key

Thinking of making a new property your main residence? Here’s a tip: even if you intend to make your new property your primary home, you’ll still face the 5% surcharge unless you’ve already sold your current home. However, if you sell your previous home within 36 months, you can apply for a refund on the surcharge. This makes timing a big factor when coordinating a sale and a new purchase.

Stamp Duty Thresholds Changing in Spring 2025

On April 1, 2025, Stamp Duty thresholds are set to revert to pre-2022 levels, which could impact buyers. Here’s the breakdown:

Current Stamp Duty Thresholds (Until April 1, 2025):

• Up to £125,000: 0%
• £125,001 to £250,000: 0%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

New Thresholds (Effective April 1, 2025):

• Up to £125,000: 0%
• £125,001 to £250,000: 2%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

With the threshold change, properties between £125,001 and £250,000 will face a 2% rate, meaning an added £2,500 minimum cost. If you’re buying in this price range, you might consider advancing your purchase to lock in the current rates.

What This Means for Buyers

• Higher Costs for Second Homes: The increased 5% surcharge starting October 2024 will directly impact those looking to buy-to-let or invest in holiday homes.
• Timing for Main Residences: If you’re upgrading your main home, try to align your sale and purchase closely. Remember, if the sale is delayed, the refund window remains open for 36 months.
• Buying Before the Spring Threshold Change: For those in the lower property bands, buying before April 2025 will help you avoid the additional 2% Stamp Duty cost on properties between £125,001 and £250,000.

Tips for a Smooth Transaction

Stamp Duty is due within 14 days of completing a property purchase, so make sure to have the funds ready. Working closely with your solicitor or conveyancer can make this process smoother, and consulting with a property expert can help you make the best financial decisions.

With these changes around the corner, timing is crucial for anyone planning to buy a second home or a buy-to-let property. Make informed decisions and consider connecting with a property expert to help guide your investment strategy.