Much of the former Chancellor’s mini-Budget has now been repealed, but one ‘rabbit from the hat’ has been retained.
In his speech on 23 September 2022, the former Chancellor set out major changes to the thresholds for Stamp Duty Land Tax (SDLT), which have been retained by the incoming Chancellor Jeremy Hunt.
Put simply, the thresholds for first-time buyers have increased from £300,000 to £425,000 on property worth up to £625,000, while for everyone else, the threshold has doubled from £125,000 to £250,000.
What this means depends on whether you are a first-time buyer, a home-mover, or a second-home buyer or investor.
The changes mean that first-time buyers purchasing a residential property for £425,000 will not pay any SDLT. First-time buyers purchasing a property for more than £425,000 will only pay SDLT on the excess over £425,000, as long as the property does not cost more than £625,000. For a first-time buyer paying more than £625,000 for their property, the normal SDLT threshold for residential properties will apply.
A first-time buyer purchasing a home for £400,000 will now pay no SDLT, rather than the £5,000 they would have been liable for under the previous regime.
Meanwhile, a first-time buyer purchasing a property for £600,000 will now pay £8,750 in SDLT rather than the previous £20,000.
Crucially, where homes are being purchased jointly, both parties must be first-time buyers to qualify for relief.
Home movers do not benefit from the same levels of relief as first-time buyers but will see savings of up to £2,500.
A home mover buying a property valued at £200,000 will now pay no SDLT but would previously have paid £1,500.
Buying a property at £400,000 would see the SDLT charge fall from £10,000 to £7,500 – a saving of £2,500.
Buyers of properties worth £600,000 will benefit from the same saving with the SDLT charge falling from £20,000 to £17,500.
Second home buyers, landlords and investors
Although landlords and investors also benefit in a similar way to home movers, they will still continue to need to pay an additional three per cent on the total purchase price of the property if they own another home.
There is an additional two per cent surcharge on top of this if the individual is considered an overseas investor.
Although rising interest rates have added additional costs to mortgages, the changes to SDLT still offer an opportunity for many individuals to acquire new properties at a lower cost.
Link: Stamp Duty Land Tax