Increase in buyers looking to complete on house purchases before April 2025
With 12-16 weeks as the industry average time from sale agreed to completion before even taking into the account the time to find a proceedable buyer, savvy home sellers are listing their properties now while buyer demand is high for those looking to complete the transaction before increases to Stamp Duty Land Tax (SDLT) from April 2025
Stamp Duty Land Tax (SDLT or Stamp Duty) is a tax payable to HM Revenue and Customs (HMRC) when buying a property or land in England and Northern Ireland. The rate you pay will vary, depending on whether the buyer is:
- a first time buyer
- a UK resident
- purchasing the property as an individual or company
- purchasing an additional property (2nd holiday home, investment etc)
- replacing a main residence
The temporary increase announced in 2022 is due to end on 31 March 2025 so any transaction completing from 1st April 2025 will be subject to the increased rates.
The current standard Stamp Duty rates (September 2022 to 31 March 2025) for an individual UK resident replacing their main residence is as follows:
- 0% up to £250,000
- 5% above £250,000 and up to £925,000
- 10% above £925,000 and up to £1,500,000
- 12% above £1,500,000
From 31 March 2025, the proposed SDLT rates for an individual UK resident replacing their main residence areas follows:
- 0% up to £125,000
- 2% above £125,000 and up to £250,000
- 5% above £250,000 and up to £925,000
- 10% above £925,000 and up to £1,500,000
- 12% above £1,500,000
Below is an example for a standard residential purchase of a freehold property for a UK based individual replacing a main residence comparing the SDLT liability before and after the rate change:
First time buyers
The changes are likely to have the most significant impact on first time buyers:
- The 0% 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 (0% on the first £425,000, 5% on the remainder up to £625,000) will return to the previous level of £500,000.
Below is an example for a standard residential purchase of a freehold property for a UK based first time buyer comparing the SDLT liability before and after the rate change:
Completing a purchase before the Stamp Duty changes can save buyers a significant £2,500. This is the same for second homeowners (investors) and companies. It may be worthwhile for residential buyers, investors and companies to bring forward their plans to take advantage of the current Stamp Duty rates before the increase takes effect.
Conclusion
Don't pay HMRC more than you have to! If you are thinking of moving, it is worth considering bringing your plans forward. This is to not only take advantage of SDLT savings for an onward purchase, but for sellers, listing your property at a time when buyer demand is high helps achieve the best possible price. Achieving the best price is of course conditional on choosing the most proactive agent with the best marketing strategy.
This date might seem far away, but it is worth noting that the average residential property transaction takes between 12 and 16 weeks to complete, sometimes longer with complex chains and other complications involved. Typically, these complications are not foreseen and only uncovered during the progression process.
Please also keep in mind that this 12-16 timeframe for progressing the transaction with solicitors does not take into consideration the time it may take to attract a buyer.
