Stamp Duty Changes in the UK from April 2025

The property market in the UK is vast and well-established. Given its size and importance, it is subject to a number of different rules and legislation. An important aspect to understand is the Stamp Duty Land Tax (SDLT), which has been subject to a number of changes in recent years. These changes are likely to affect homeowners, investors and developers. As a development finance broker, we are well equipped to help our clients navigate the ever-changing landscape of property ownership, including SDLT and property tax.

Overview of Stamp Duty in the UK

Stamp Duty Land Tax is a tax levied on property purchases in England and Northern Ireland. It applies to residential, buy-to-let, and commercial property transactions, with different thresholds and rates based on the property’s value and type.

Key Changes Coming in April 2025

1. Temporary Stamp Duty Relief Ending

The temporary SDLT relief introduced in previous years to stimulate the property market is expected to end. This means:

• The threshold for SDLT on residential purchases will revert to £125,000 (down from the current £250,000).
• First-time buyers will see their relief cap reduced from £425,000 to £300,000, making affordability a key concern.
• Buyers of properties over £1.5 million will continue paying 12% on the portion above this threshold.

2. Additional SDLT on Second Homes and Buy-to-Let Properties

Investors and landlords should prepare for potential increases in SDLT surcharges for second homes and buy-to-let properties. Currently, an additional 3% surcharge applies, but speculation suggests a possible rise to 4% or higher to curb investor activity in the residential market.

3. Changes to Non-UK Resident Stamp Duty

Foreign investors currently pay a 2% surcharge on property purchases in England and Northern Ireland. From April 2025, this surcharge might increase, particularly in high-demand areas such as London, to prioritise domestic buyers.

4. Commercial and Mixed-Use Property Adjustments

Property development finance clients should be aware of potential SDLT changes for commercial and mixed-use properties. The government is reviewing:

• Higher thresholds for commercial purchases to stimulate investment.
• New rates for mixed-use properties, possibly reducing costs for developments with residential and commercial elements.

Impact on Property Developers

For those involved in property development finance, the SDLT changes could have both positive and negative implications:

• Higher upfront costs for land and residential acquisitions.
• Potential reliefs for large-scale developments, especially those incorporating affordable housing.
• Shifts in investor sentiment, potentially increasing demand for commercial and mixed-use properties.

How a Development Finance Broker Can Help

Navigating SDLT changes requires strategic financial planning. As development finance brokers, we assist clients by:

• Structuring financing solutions to mitigate SDLT costs.
• Exploring alternative investment structures to maximise tax efficiency.
• Identifying lenders who consider SDLT implications in funding arrangements.

Conclusion

With SDLT changes on the horizon, property investors and developers must stay informed to avoid unexpected costs. Whether you need property development finance for a new project or guidance on structuring your investments, our expertise can help you optimise your financial position. Get in touch today to discuss how these changes may impact your property plans and explore tailored financing solutions.