Stamp duty changes second home rate increased and relief scheme to end

In England and Northern Ireland the higher rate of stamp duty is equivalent to an extra five percentage points on top of standard rates.

 Terry Fisher, chief executive of We Buy Any Home, has described it as a shock to many sellers.

 "Rachel Reeves’ decision to raise Capital Gains Tax for those selling second homes will come as a shock to many property owners who were already feeling the pinch," he says. 

"This increase could discourage people from selling their second properties, especially in areas where buy-to-let investments and second homes make up a significant part of the housing market. It’s likely we’ll see a reduced flow of these properties onto the market, which could limit options for buyers looking to enter the property ladder."

This could have an impact on the number of rental properties available, forcing rents up, as he explains: "For smaller landlords, especially those relying on a few properties for income, the raised Capital Gains Tax could force a hard decision between selling now and facing a steep tax bill or holding onto properties longer than planned. We may see more landlords holding off from selling, which in turn could reduce rental availability. For renters already coping with tight supply, this change may mean even fewer options and increased rents."

Angharad Truman, ARLA Propertymark President agrees: “We continue to see a growing disparity in the number of private rented homes available against a backdrop of increasing demand from tenants. Therefore, it is disappointing to see that the UK Government did not address this fundamental issue in its autumn budget and instead has announced yet another blow for landlords by increasing Stamp Duty on second homes.

“The private rented sector plays a crucial role in housing the nation with over 4.6 million homes in England alone, therefore it is imperative that the UK Government does not continue to push landlords out of the market."

There have also been concerns about the decision not to continue Stamp Duty relief extension. The biggest difference is that the threshold at which stamp duty must be paid will go back to its previous level of £125,000, rather than the more generous £250,000.

As a result, house movers will have to pay stamp duty on a greater portion of their home’s value.

John Fraser-Tucker, Head of Mortgages at broker Mojo Mortgages, said: "The failure to extend the Stamp Duty relief beyond 31st March 2025 is incredibly disappointing for aspiring homeowners.

"With over a third (36%) of first-time buyers already seeking financial support from family, this additional cost could push homeownership even further out of reach for many.

"For an average-priced property (£328,036), first-time buyers will now face an extra £3,901 in upfront costs. This change could force many to delay their dreams of homeownership.”

He also voiced disappointment that  the proposed Freedom to Buy scheme had not yet been put in place.

"This innovative proposal was designed to ease the path to homeownership by allowing mortgage lenders to accept lower deposits, with the government providing a safety net in case first-time buyers encountered financial difficulties," says John.  

"The scheme's premise was simple yet potentially transformative: the government would step in to repay a portion of the mortgage lender's potential losses in the event of repossession.

"In today's housing market, where the average age of first-time buyers has crept up to 33 years and 8 months old, many young people are watching their dreams of homeownership slip further out of reach. The Freedom to Buy scheme offered a glimmer of hope, particularly for those struggling to save substantial deposits in high-demand areas.

"However, the lack of action on this scheme represents a missed opportunity to address the growing generational divide in property ownership and is likely to leave many feeling let down and uncertain about their chances of owning a home."