There was bad news in the Budget for homebuyers planning on purchasing a second property, but more positive announcements for those in need of affordable housing.
Labour had previously asserted that “those with the broadest shoulders should bear the greatest burden”, so it was perhaps unsurprising that the Chancellor Rachel Reeves chose to target those making second home purchases by raising the additional property stamp duty charge.
Here, we explain what the Budget 2024 means for homebuyers, and the property market more broadly.
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Higher stamp duty surcharge for second home buyers
If you buy an additional property in England or Northern Ireland, which is worth £40,000 or more, you’ll now be charged 5% extra on top of the normal Stamp Duty rates, up from 3% before the Budget. These changes came into immediate effect so will affect anyone purchasing a second property now.
This means the total Stamp Duty charges for those purchasing second homes are tiered as follows (old rates are shown in the second column).
| Property value of additional property | Stamp duty old rate | Stamp duty new rate |
| Up to £250,000 | 3% | 5% |
| The portion from £250,001 to £925,000 | 8% | 10% |
| The portion from £925,001 to £1.5 million | 13% | 15% |
| The portion above £1.5 million | 15% | 17% |
The additional tax is not payable if your second home is a caravan, mobile home or houseboat.
Bear in mind that you will also need to pay the additional charge if you buy your new home before you’ve sold the previous one because, for a short time at least, you’ll own two homes. You may be able to claim the additional tax back via your self-assessment tax return.
Phil Blackburn, partner at business advisors and chartered accountants Lubbock Fine says: “Buy to Let landlords are already struggling – a two-thirds increase in stamp duty will hit them very hard.”
“We’ve already seen a marked decrease in the purchases of rental properties – those purchases have fallen to their lowest levels since stamp duty on additional dwellings was introduced in 2016.”
“The good news is that landlords have not been hit by any increase in CGT. That’s a pleasant surprise for many. However, the risk for the Government was that if they raised CGT on BTL too high then investors would just defer sales in the hope that CGT would eventually fall.”
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,000 reviews.
No extension to lower stamp duty rates
The Chancellor refused to extend temporary cuts to stamp duty rates in the Budget, so first-time buyers in particular will face much higher tax bills from next April.
Under current rules, first-time buyers benefit from reduced stamp duty rates if they purchase a property valued at £625,000 or less. No stamp duty at all is payable on the first £425,000 of the value of the property and after that buyers must pay 5% stamp duty on any remainder up to £625,000. However, from 1 April 2025 first-time buyers will only get the first £300,000 of the value of the property stamp duty free, with 5% paid on any remainder up to £500,000.
Laura Suter, director of personal finance at AJ Bell, said: “It means a first-time buyer purchasing a property at the current limit of £625,000 will face a £11,250 hike to their stamp duty bill from April, as they would no longer be eligible for the first-time buyer tax break.
“Those moving on to their next home will also pay thousands more, but will face a less severe hike. Currently the first £250,000 of a property purchase is free of stamp duty, and then you pay 5% on any amount up to £925,000. However, from April only the first £125,000 of a property purchase will be stamp duty free, with a 2% rate charged from £125,000 to £250,000. The re-introduction of the 2% band for stamp duty means that home movers will pay up to £2,500 more on their tax bill.
“We’ll inevitably see a flurry of people looking to lock in their home purchase before the deadline next March – with estate agents and solicitors braced for some long days ahead of the finish line.”
Of course, many first-time buyers will miss the deadline, and may turn to parents or grandparents to help them cover higher stamp duty bills.
Ben Waugh, Managing Director of more2life, said: “From April 2025, when the current stamp duty exemptions for first-time buyers expire, those looking to get onto the housing ladder may have no choice but to rely on family for financial support. Currently, around 1 in 10 families, when releasing equity from their home, do so to gift money to family, a figure we expect to grow as a result of the Budget changes.”
You can find out more in our article Can I take money out of my property to give to my children? Bear in mind that equity release definitely won’t be right for everyone, as it can affect any means-tested benefits you receive and will also reduce the value of any inheritance you’d planned to leave, so it’s essential to seek professional financial advice first.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Right to Buy and affordable housing
The Chancellor announced plans to cut the ‘Right to Buy’ discount given to those purchasing their council home and said that local authorities will be able to retain 100% of the receipt of these sales (previously a percentage had to be returned to the Treasury).
The discount currently allows renters to buy their homes from councils at a discount of 35%, which can increase to a maximum of 70%. Discounts will now shrink to £16,000, or to £38,000 for homes in London.
New homes and affordable housing
The government will invest more than £5bn to deliver their housing plan, with the Budget increasing the Affordable Homes Programme to £3.1bn to increase the supply of affordable housing and support small housebuilders.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
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