Stamp Duty Land Tax (SDLT) is a property tax payable in England and Northern Ireland when purchasing a property over the price of £250,000. However, first-time buyers are eligible for relief from stamp duty if the property is valued at under £425,000.
For properties over this valuation, the relief becomes limited and buyers, particularly those who are interested in purchasing luxury property, can end up paying significant taxes. But conditions and limits for stamp duty are set to change in 2025, which will significantly impact buyers going into next year.
Below we examine what stamp duty changes are coming in 2025 and how buyers can successfully navigate these changes in the UK housing market.
Current Stamp Duty Rates & Exemptions
The current stamp duty rates for residential properties are:
0% for the first £250,000
5% on the portion from £250,001 to £925,000
10% from £925,001 to £1.5 million
12% on the portion over £1.5 million
These rates apply to both cash buyers and mortgage buyers.
As mentioned already, first-time buyers purchasing property below £425,000, are eligible for full relief, paying no stamp duty on the property’s value. For properties between £425,001 and £625,000, the relief decreases and a 5% tax on the portion above £425,000 will now be applicable. Any properties over £625,000 do not qualify for this relief, and standard rates apply.
If you are not a first-time buyer, it’s worth noting that purchasing additional properties attracts an extra 3% stamp duty surcharge if you already own a property valued above £40,000. For those purchasing multiple properties valued over £1,000,000, this will significantly increase the amount you pay in stamp duty.
How Is Stamp Duty Changing in 2025?
The current rates and reliefs for stamp duty were introduced as a temporary measure to help first-time buyers. Although there was hope this would continue, it was announced earlier this year that the current initiative would end on the 31st of March in 2025.
The changes to stamp duty are going to have a significant impact on the housing market in England and Northern Ireland. Changes to the rates of relief include:
0% at £250,000 will return to the previous level of £125,000.
A new 2% rate will be introduced for properties valued from £125,000 up to £250,000
0% for first-time buyers at £425,000 will return to the previous level of £300,000.
First-Time Buyers Relief at £625,000 will return to the previous level of £500,000.
The average price of a home in the UK is £282,000, which means stamp duty will now apply to the majority of property purchases. Relief for first-time buyers has fallen massively, which may pose a problem for those buying their first property although, higher-net-worth individuals who are buying higher-value properties will not notice much change.
Timing Considerations
If you’re planning to purchase any property in England and Northern Ireland before the new changes come into effect, then it would be smart to move quickly. The process of buying a house can be complicated and completing a purchase can often be subject to delays with conveyancing. This likely will result in higher costs if you’re a first-time buyer or, you’re looking to purchase a property that will see a hike in stamp duty once the new rates come into effect next spring.
Whilst the relief that is currently available on stamp duty for both first-time buyers and those who already own property is generous, it is worth considering that more changes could still be announced in the future that may affect those wishing to purchase a higher-value property. At the moment, higher-value property transactions are capped, but there is no reason why they may not rise in the future and pose significant extra costs for those looking to purchase multi-million-pound properties.
Investing into the property market in England and Northern Ireland now will benefit buyers before changes to stamp duty reliefs and exemptions come into force at the end of March next year. These changes will have a significant impact on the cost of buying a property, potentially costing significantly more than before, but there remains a possibility that these changes could have a knock-on effect which works to a buyer's advantage.
Those looking to sell their property could be forced to lower their asking price, and whilst this will not be enough to rule out paying any stamp duty, the difference between what a buyer pays could be significant. Furthermore, the increases in stamp duty can be used by a prospective buyer as a negotiating point on the purchase of a property, provided the seller is happy to talk about lowering their asking price.
