Understanding the new SDLT surcharge: Navigating new costs for property buyers

Overview of the SDLT changes in the Autumn 2024 Budget

The government, in their Autumn 2024 Budget, announced that the Stamp Duty Land Tax (SDLT) surcharge for second homes would increase by an additional 2%, taking it from 3% to 5% effective from 31st October 2024.

It’s important to remember that there is already a separate, additional 2% additional SDLT rate where the buyer of residential property is non-UK resident, such as non-resident UK companies or overseas-based individuals.

A breakdown of new SDLT rates for second homes and non-UK residents

This means that a non-UK resident buying a dwelling could see their effective SDLT rates being 5% (2nd home surcharge) + 2% (non-resident surcharge) giving a base 7% SDLT rate which is in addition to the normal SDLT bandings.

Example calculations: how the SDLT increase affects property buyers

For example, an individual purchases a 2nd home as an investment/BTL for £1m, this property is in addition to them already owning their own main residence and this 2nd home is not replacing their main residence:

In this simple example, there is an additional £20,000 SDLT as a result of the 2% increase to the existing 3% surcharge.

Future SDLT adjustments and their timelines

The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 when purchased by corporate bodies will also be increased by 2 percentage points from 15% to 17% from 31st October 2024. There are also some future changes to SDLT which were originally set by the previous government and which the current government have not altered, so from 31st March 2025:

• The nil rate threshold for dwellings is currently £250,000 but will return to the previous level of £125,000.
• The nil rate threshold for first-time buyers which is currently £425,000 will return to the previous level of £300,000.
• The maximum purchase price for which First-Time Buyers Relief can be claimed is currently £625,000 and will return to the previous level of £500,000.

What buyers need to know: closing the window on current SDLT rates

Whilst the above changes are due to apply later this year, a buyer may find that the whole buying process is quite slow. Obtaining mortgages, deposits, property searches and surveys can be time consuming. On average, acquiring a property can take between 5-6 months. Therefore the window for buyers to benefit from the current SDLT rates/banding is closing fast.

Get in touch

Should you require further information on Stamp Duty Land Tax (SDLT) and the applicable reliefs and rules for your specific circumstances, please contact our expert Tax/SDLT team. Our specialists are committed to ensuring compliance and helping you minimise your SDLT liability with the appropriate strategies. To gain a deeper understanding of SDLT services and to stay informed with the latest developments, visit Rayner Essex SDLT Services.