Property Tips by Chartered Surveyor Ian Rock FRICS  –  from the Haynes House Manual series

 

 

The Stamp Duty Deadline is Fast Approaching – Act Now To Avoid Losing Out

 

Stamp Duty  is a tax paid when you purchase property in the UK.  It’s also known as ‘Stamp Duty Land Tax’  or SDLT.

The amount of tax you have to pay depends on factors such as whether you’re buying your first home or if you’re buying an additional property so you will own more than one house or flat.

According to property website Rightmove   thousands of home buyers could get a massive unexpected tax bill when the Government’s temporary relief from stamp duty ends on 31 March 2025. This is the date when the current temporary stamp duty tax thresholds introduced in September 2022 will end, significantly increasing the cost of moving home, particularly for first-time buyers (FTBs).

To make matters worse, in some parts of the country the purchase process is currently taking longer than usual because of delays in the process – mainly conveyancing, surveys and valuations.

To avoid paying extra tax and benefit from the current stamp duty rates, you need to complete your property purchase by 31st March 2025.   However the average time taken from when an offer is accepted until legal Completion is currently more than 3 months. So planning your purchase carefully is essential so you don’t get ‘stuck in a logjam’.

 

 

Stamp duty changes from March 2025

There’s a lot at stake. From 31st March 2025, the zero-rate threshold for all buyers will reduce from £250,000 to £125,000.

For first-time buyers, the threshold will decrease from £425,000 to £300,000, and the maximum property price eligible for first-time buyer relief will drop from £625,000 to £500,000.

It’s not just bad news for buyers – sellers too are likely to suffer because unhappy buyers stuck with a unexpected tax bill may be tempted to ‘gazunder’. ‘Gazundering’ is where a buyer unilaterally decides to reduce the agreed price at the last minute just before Exchange of Contracts (the stage when a sale becomes legally binding).

Most buyers will have already factored in the stamp duty saving, and if it turns out they can’t complete in time they will suddenly need to find several thousand pounds out of nowhere – or ‘re-negotiate’ the agreed price.

Normally a standard time period of 2 weeks is allowed between Exchange and Completion, although legally this can be any amount of time that the buyers and sellers agree – longer or shorter. You can even Exchange and Complete on the same day if all parties agree.

 

First-Time Buyers

First-time buyers will be most affected by these changes, as the reduction in the nil-rate threshold and maximum relief limit could make it harder to get on the property ladder.

Currently, first-time buyers pay no stamp duty on homes up to £425,000, but from 31st March 2025, this threshold will drop to £300,000.

With 5% charged on homes between £300,001 and £500,000 this means first-time buyers could face on average a £6,250 tax when purchasing a home that was previously exempt.

 

Stamp Duty Rates from 31st March 2025 (except First Time Buyers)

• Up to £125,000                         ZERO
•  
• £125,001  to   £250,000             2%
•  
• £250,001  to   £925,000             5%
•  
• £925,001  to   £1.5 million         10%
•  
• Over  £1.5 million                      12%

 

You can use the Government  SDLT calculator to work out how much tax you’ll pay.

 

 

 

Higher rates for additional properties

You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.

Use the SDLT calculator or check the higher rates to work out how much tax you’ll pay.

 

 

If you’re replacing your main home

If  the property you’re buying is replacing your main residence and that has already been sold you will NOT need to pay the extra 5% in stamp duty   – i.e. where you buy your next home before the sale of your old one has completed.

Although you will initially be charged the higher rate if you haven’t sold your main residence – because on paper you actually own 2 properties – you can apply for a refund if you sell your previous main home within 36 months.

 

 

 

See Rightsurvey.co.uk for a quick guide to survey prices

 

Check out our other posts for more info that will help you pay the right price for the right property.

We would always recommend using RICS certified surveyors in every instance – don’t get caught out, get instant quotes for RICS surveyors here.

 

                                                              

 Ian Rock’s Rightsurvey property tips are taken from the Haynes House Manual series.