Huge stamp duty change from TOMORROW revealed in Rachel Reeves’ Budget
Date: 2024-10-30
A HUGE change to stamp duty has been revealed by Rachel Reeves in the Autumn Statement.
Stamp duty is one of the additional upfront costs that purchasers may incur when buying a property.
The maximum value of a property on which first-time buyers’ relief will also remain at £625,000[/caption]
Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.
If a property is more expensive they only pay tax at 5% on the portion above £425,000 and up to £625,000.
As a result, 80% of first-time buyers are not liable for any stamp duty, while only 14% are required to pay a reduced rate, according to property site Zoopla.
The lower limit for first-time buyer stamp duty exemption was temporarily increased in 2022, but it was scheduled to revert to £300,000 in April of the coming year.
Similarly, the threshold at which all other buyers begin to pay stamp duty was raised from £125,000 to £250,000.
This increase was also set to expire in April next year.
However, Rachel Reeves confirmed in the Autumn Statement that the current thresholds will be made permanent and will not change in April 2025.
It’s a huge boost for all home buyers and means they’ll continue to benefit for longer.
Speaking in the Commons, Rachel Reeves said: “In our manifesto we committed to reforming stamp duty land tax to raise revenue while supporting those buying their first home.
“We are increasing the stamp-duty land tax surcharge for second-homes known as the “Higher Rate for Additional Dwellings†by two percentage points, to 5%, which will come into effect from tomorrow.
“This will support over 130,000 additional transactions from people buying their first home, or moving home over, the next five years.”
For example, it means that a first-time buyer purchasing a property at £4250,000 will continue to save £6,250 in stamp duty.
The maximum value of a property on which first-time buyers’ relief will also remain at £625,000.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.