On 23 September 2022, the Mini Budget included changes to residential SDLT rates. Unlike the SDLT holiday of 2020-2021, which was only temporary, these stamp duty cuts have been confirmed by the government as permanent.
The SDLT changes came into effect immediately on the 23 September 2022.
What is the change?
For anyone purchasing a residential property in England and Northern Ireland, the government will permanently increase the nil-rate threshold from £125,000 to £250,000.
Buyers will pay stamp duty at a rate of 5% on the value of a property above £250,000 up to £925,000, 10% on the value between £925,000 and £1.5million, and then a top rate of 12% above £1.5 million.
This change is similarly reflected for first time buyers, where the threshold to start paying stamp duty land tax has been increased from £300,000 to £425,000. The maximum value of a property on which first-time buyers’ relief can be claimed will be £625,000 instead of the £500,000. This measure implies that all individuals purchasing residential property on or after 23 September will pay less or no SDLT at all.
For first time buyers looking to purchase in more expensive locations, such as London and the Southeast, they will be able to benefit from thousands of pounds in tax savings as a result of these changes.
Who does this apply to?
Everyone purchasing a property in England or Northern Ireland that had not completed by 23 September 2022.
The cuts to stamp duty land tax will undoubtedly be most beneficial to first time buyers, who will embrace this as a welcome relief.
However, what is uncertain is whether these changes will provide a much-needed boost for the residential property market post pandemic.
There are further concerns about what is being done to ease the burden on those buying homes in the middle and upper price bands, especially with higher mortgage rates and increased interest rates probably lying ahead?
As residential property lawyers, this is something we are very aware of. We can offer advice and guidance to clients on how the recent announcement of SDLT cuts will impact property transactions going forward.