Updated: Second home buyers to face stamp duty surcharge rise

Today Chancellor Rachel Reeves unveiled Labour’s first budget since being elected to government – with a focus on slashing national debt, boosting the UK economy and protections for working Brits.

Reeves announced there would be an increase in Stamp Duty for second homes. The government has also confirmed the position on first time buyer reliefs due to come to an end in March 2025.

Update and clarification of when the change comes into effect

Second-home buyers face a stamp duty land tax surcharge rise of two percentage points – to five per cent – starting from Thursday 31st October.

The Chancellor pledged: “This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years.”

The increased rates come into effect for transactions which complete or which are substantially performed on or after 31 October 2024.

Transitional rules will apply so that contracts which were exchanged before 31 October 2024 but which are completed or substantially performed after that date continue to pay the surcharge at 3 percentage points above the residential rates in force at the effective date of transaction.

Transitional rules will also apply so that contracts which were substantially performed before 31 October 2024 and which complete on or after that date do not have to submit a further SDLT return or pay additional tax on completion where an additional tax liability arises solely:

  • due to the changes announced at Autumn Budget on 30 October 2024, or
  • due to a combination of those changes and substantial performance having taken place during a temporary relief period (either the period between 8 July 2020 and 30 September 2024, or the period between 23 September 2022 and 31 March 2025).

First Time Buyer Relief

The government have also confirmed the temporary rates of relief for first time buyers, introduced by the previous government in 2022, will end on 31st March 2025 – reverting to 2022 SDLT rates

  • The residential nil rate band will revert to £125,000
  • The First-time Buyers’ Relief nil rate band will revert to £300,000
  • The maximum transaction value for First-time Buyers’ Relief will revert to £500,000.

Further clarification is available on gov.uk.

Other policies from the budget include plans to remove the non-dom tax scheme, which will see a reversal of Britain’s tax rules for non residents, set to be introduced in April 2025; and increases in capital gains tax to 18 per cent and 24 per cent which she promised would ‘raise £2.5 billion for the economy’.

Today’s Conveyancer will continue to publish reaction to the budget as it develops.

16 responses

  1. This may indeed disincentivise investors, but surely that means there will be more properties for first time buyers to choose from?

    1. Stamp duty on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property in England and Northern Ireland, will rise from 3% to 5% on Thursday.

  2. The amount of work this short notice increase puts on those in the profession and at a month end is just bonkers. For those buyers who will bite the bullet then there’s more source of funds checks that need to be done for them etc etc etc not to mention the fall throughs of cases that were due to complete over the next few days that will now not go ahead.

    1. Any definite information (links) on not having to pay increased stamp duty of 2% extra if exchange has occurred before 31/10/24?

  3. Via the BLG online forum. Not a member: rh@boldgroup.co.uk

    “It seems to me that “higher rates” transactions are caught by the hike from 3% extra to 5% extra if:

    (a) They complete (strictly substantially perform) on or after 31 October 2024 unless

    (b) In pursuance of a contract entered into before 31 October (provided it is not varied from 31 October and provided the buyer does not change).

    Rather quietly the flat rate which can apply to companies buying dwellings for over £500,000 is increasing from 15% to 17% in the same time frame.

    So it seems not too late to exchange contracts today to lock into the existing rates.”

  4. I appreciate the want to drive private landlords but the issue with first time buyers trying to get on the market is not due to the landlords ‘snapping’ all the properties up, it is due to the current cost of living and house prices as they stand already.

    1. its people buying second homes pushing prices up. if they didn’t buy them there would be more available so prices would drop and the renters could then buy instead of renting

      1. A lot of the time it’s only a second home because your main home is not selling.
        You have every intention of only owning and living in one property

  5. 2.58 The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% from 31 October 2024. These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property and the increase will provide those looking to move home or purchase their first property with a comparative advantage over those purchasing additional property. This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence.82 Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase.

    From: https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn_Budget_2024__web_accessible_.pdf

    (All credit to Saranjit at Brixworth Legal for tracking down the detail).

  6. Luckily where contracts have been exchanged before 31 October 2024 but complete on or after the 31 October 2024 the additional rate of 3% will apply instead of 5%. (Source gov.uk website)

    Would be good to see a comparison of SDTL on 30/10/24 vs 31/10/24

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