Increases to the stamp duty rate are due to come into effect this April, while others took immediate effect from the autumn budget. Most commentators have been hostile to them, as they place a greater tax burden on landlords and other property buyers at a time when the housing sector is in serious difficulties,while doing nothing for those looking to rent a home.
The most significant budget measure was an increase in the surcharge from 3% to 5% paid by landlords and other second home owners in England and Northern Ireland,which took effect last October.
A market in freefall
The rise in the stamp duty land tax (SDLT) surcharge follows the tapered reduction of tax relief on landlords’ mortgage interest payments. This has rendered some properties loss-making and owners have been selling up according. This has been matched by falling purchases of buy-to-let (BTL) properties.
The estate agent Hamptons reported in July that landlords bought a mere 10% of all properties sold in the first half of 2024, the lowest share since records began in 2010. And data from UK Finance showed that there were 59,000 fewer outstanding BTL mortgages in the first quarter of 2024 than the same quarter a year before, with the total dropping from 2.04 million to 1.98 million.
In September, Right move reported that the number of former rental properties listed for sale was higher than it has ever been. It said 18% of homes for sales were rental properties, up from 8% in 2010. The figure is nearly a third in London.
It is not yet clear if the higher rate will increase revenues to the Treasury.Investors have plenty of options about where to put their money, and there is now little incentive for someone to buy a rental property when they have to pay up to 17% in tax to do so, particularly when other forms of investment have minimal or non-existent entry costs.
As a result, the rented property sector can be expected to shrink further, aided by the chancellor’s decision not to raise capital gains tax on sales of rental properties, incentivising landlords to get out before they are hit with anymore taxes and regulations.
What are the new stamp duty rates?
So what changed in the budget? For one thing from 1 April 2025 the tax-free amount was halved so only the first £125,000 of a property purchase is tax free. In addition, the surcharge for additional dwellings went up by two percentage points on 31 October and now applies to the whole of a purchase rather than cutting in at £250,000.
Higher rate stamp duty bands
Before 31 October 2024
| Value £ |
Rate % |
| Up to £250,000 |
nil |
| £250,001 £925,000 |
8% |
| £925,001 to £1,500,000 |
13% |
| Above £1,500,000 |
15% |
From 31 October 2024 to 31 March 2025
| Value £ |
Rate % |
| Up to £250,000 |
5% |
| £250,001 to £925,000 |
10% |
| £925,001 to £1,500,000 |
15% |
| Above £1,500,000 |
17% |
From 1 April 2025
| Value £ |
Rate % |
| Up to £125,000 |
5% |
| £125,001 to £250,000 |
7% |
| £250,001 to £925,000 |
10% |
| £925,001 to £1,500,000 |
15% |
| Above £1,500,000 |
17% |
So, for example, a homeowner buying a house for £750,000 to rent out would from April 2025 be paying £65,000 in SDLT, up from £40,000 before the budget,essentially adding about 3% to the purchase cost of the property, as well as reducing the yield from it.
Wales and Scotland
Landlords in England who are thinking of looking farther afield to expand their portfolios will not find the tax regimes elsewhere in Great Britain any more favourable.
In Wales from 11 December 2024 landlords buying additional properties were hit with a one percentage point increase in land transaction tax. The tax bands now range from 5% on purchases up to £180,000 to 17% on purchases above £1.5 million.
The rates in Scotland for additional property purchases are the highest in the UK.From December anyone buying an additional home worth up to £145,000 pays 8% inland and building transaction tax rising to 20% on purchases costing more than £750,000.
Company purchases
The surcharge on residential property purchases made by companies was also increased to 5% from 3%, with an exemption for properties worth less than £40,000. If the property is worth more than £500,000 the 17% rate may apply instead depending on the circumstances.
First-time buyers
From 1 April 2025, first-time buyers will pay stamp duty starting at 5% on a purchase over £300,000 rather than £425,000. If the property they are buying costs more than £500,000 they will lose this higher threshold and the £125,000 threshold will apply. Until 31 March the higher threshold is £625,000.
Stamp duty rates for movers
From 1 April the tax-free allowance is halved to £125,000. The standard rates of SDLT for people buying a home to live in, who do not own other properties and are not first-time buyers are as follows.
Property price SDLT
| Value £ |
Rate % |
| Up to £125,000 |
nil |
| £125,001 to £250,000 |
2% |
| £250,001 to £925,000 |
5% |
| £925,000 to £1,500,000 |
10% |
| Above £1,500,000 |
12% |
Stamp duty rates for non-UK residents
A 2% surcharge is levied on non-UK residents buying properties in England and Wales. This is on top of whatever rate would otherwise be payable, including the higher rate for additional dwellings.
Stamp duty rates for non-residential properties
Tax rates are a good deal lower for purchases of commercial property, some agricultural land and dual use property, for example, a shop with a flat above it.
Non-residential property price SDLT
| Value £ |
Rate % |
| Up to £150,000 |
nil |
| £150,001 to £250,000 |
2% |
| Above £250,001 |
5% |
Effects on the property market
It is hard to find a winner among those affected by the increase to the stamp duty surcharge. Landlords will pay more tax, will not be able to expand their portfolios and will increasingly be looking at the exit door. A further contraction in the quantity of homes to let will exacerbate what has often and justly been called a housing crisis and, as noted above, the high tax rates on property purchases is likely to lead to fewer transactions and therefore lower revenues. Any tax has an optimal rate above or below which revenues decline, and it does look as if the Treasury has missed this particular sweet spot.
If you would like help and advice about stamp duty please call Finsbury Robinson on 020 8858 4303 or email us at info@finsburyrobinson.co.uk. Our team of experts will be happy to assist.
