Yesterday’s Autumn Budget brought several impactful updates for residential property owners and investors. While there was no specific mention of changes to Stamp Duty Land Tax (SDLT) relief for first-time buyers, the expectation remains that the threshold will reduce from £425,000 to £300,000 on 31 March 2025. Additionally, changes to the SDLT surcharge on second homes and an increase in Capital Gains Tax payable on disposal of second or investment properties could influence both the timing and strategy of residential property transactions. Senior Property Consultant Lawyer Sarah Gillbe shares insights into what these updates could mean for homebuyers and investors.
Expected Changes to SDLT for First-Time Buyers
The Chancellor did not confirm any new thresholds for first-time buyers, leaving previous announcements in place. As it stands, the SDLT relief threshold is expected to lower from £425,000 to £300,000 from 31 March 2025 when the temporary uplift put in place in 2022 will end. If this change takes effect, first-time buyers purchasing homes above £300,000 will face additional SDLT charges, adding new cost considerations for many.
Sarah notes, “The clock is ticking for first-time buyers to secure the higher threshold. With a drop to £300,000 increasingly likely, buyers should stay alert to these updates—and might want to act soon to avoid unexpected SDLT costs.”
Increased SDLT Surcharge on Second Homes
One confirmed change in the Budget is an increase in the SDLT surcharge for additional residential properties, including second homes and investment properties. The surcharge has risen from 3% to 5%, effective immediately, raising the upfront costs for those investing in rental properties or purchasing second homes.
Sarah comments: “This jump to 5% is a game-changer. Anyone looking to buy a second property or invest in rentals will need to move fast to manage these higher upfront costs. For investors, now is the time to reassess strategies to handle this increased financial load. We can expect price rengotiations (we have seen some already) as investors weigh up the costs of their intended transactions.”
Capital Gains Tax (CGT) Increases on Property Sales
The Budget also introduced higher Capital Gains Tax (CGT) rates for property disposals. From 6 April 2025, the lower CGT rate will rise from 10% to 18%, and the higher rate will rise from 20% to 24% on non-primary residences. This change directly impacts those selling second homes or investment properties, increasing the tax implications of capital gains on these transactions.
For owners considering the sale of a second home or rental property, the timing of these heightened CGT rates may impact decisions. Selling before April 2025 could allow sellers to lock in the current, lower CGT rates.
Sarah adds: “The CGT rate hike adds serious urgency for property sellers. Locking in a sale before April 2025 could save a substantial amount in taxes. The timing here is everything—this change makes forward planning essential.”
Planning Ahead in a Shifting Tax Landscape
The Autumn Budget’s changes to SDLT and CGT highlight the need for proactive planning in the residential property market. Buyers and sellers, particularly those with multiple properties, are encouraged to seek professional advice to navigate the increased costs associated with SDLT and CGT. With the potential for further updates in the Spring Budget, flexibility and forward planning are essential to managing tax implications effectively.
Sarah concludes: “These changes mark a crucial turning point. Homeowners, investors, and first-time buyers need to be prepared and proactive. Staying informed, especially with more changes potentially coming in the Spring Budget, is vital to making the best decisions in today’s market.”