If you’re planning to buy a home in 2025, you should be aware that the landscape is about to change. If you’ve been putting off taking that leap to buy while house prices are still climbing, now may be the time as the real game-changer is the government’s upcoming revisions to Stamp Duty Land Tax (SDLT).
Whether you’re a first-time buyer or moving up the property ladder, the government’s upcoming updates to SDLT will likely impact you and what you’ll need to budget for with your property purchase.
What’s changing in 2025?
The new rules are coming into effect on 1st April 2025 – let’s break down the key changes you need to know:
1. First-Time Buyers Will Lose Some Benefits
Currently, first-time buyers are exempt from paying stamp duty on homes up to £425,000. However, this relief will be cut back. From April 2025, first-time buyers will only be able to claim full relief on properties up to £300,000.
This might not sound like much, but in high-demand areas where average property prices can exceed £500,000 first-time buyers will face the same SDLT rates as standard buyers meaning a hefty tax bill for many.
2. New 2% Tax on Lower-Value Properties
A new 2% rate will apply to properties priced between £125,001 and £250,000, adding approximately £2,000 to the cost of purchasing an average home in places like West London where property prices often hover near the higher end of this range.
3. Slight tax increases for Mid-High range property purchases
For buyers at the higher end of the market, such as those purchasing homes priced around £1,000,000, there will also be a slight rise in SDLT.
For example, from April, a £1,000,000 home would now carry an SDLT charge of £43,750, up from £41,250. While this increase might not seem huge, it adds more to an already significant upfront cost.
4. Rush to complete transactions before April 2025
With the clock ticking towards April 2025, many buyers are likely to rush to complete transactions before the new rules come into effect. This could lead to an uptick in market activity as people try to avoid the higher taxes.
How will these changes affect the London property market?
If you’re buying in an area like West London, where property prices are consistently above the national average, these changes could have a significant impact. Many first-time buyers who were once able to avoid stamp duty altogether will now be facing new, higher tax rates. As a result, the affordability of homes in these areas could be further squeezed.
Local buyers should also be aware that the new 2% charge on properties between £125,001 and £250,000 will mean higher costs, even for those purchasing more modest homes. This may not dramatically alter the market for lower-priced properties, but it does add another layer of complexity for buyers.
What should buyers do now?
If you’re a first-time buyer or someone considering upgrading to a new home, act quickly if you want to avoid the increased SDLT charges coming in April, but as interest rates are also projected to decrease over 2025 it’s worth taking a look at what you can afford and talking to your mortgage broker or advisor.
The upcoming changes to SDLT will undoubtedly create a shift in the UK property market, particularly for first-time buyers. While some will see a modest increase in costs, others—especially those in high-value areas like London—will face a far steeper tax bill.
Whether you’re looking to buy a home in the next few months or planning for the long term, staying informed about these changes will help you make the best financial decisions moving forward.