In Labour’s first budget, Chancellor Rachel Reeves announced that the Stamp Duty surcharge on second homes will go up from 3% to 5%. This applies to residential property purchases in England and Northern Ireland where contracts were exchanged after 30 October 2024.
The government states that the increase is intended to help first-time buyers and those moving home over the next five years.
Anyone who already owns a property will be liable for the surcharge, which is an extra payment to be made in addition to the basic level of Stamp Duty. This is will generally include buy-to-let investors, holiday home purchasers, investors and people who buy a property before they have sold their existing one. In the latter case, it is possible to apply for a refund of Stamp Duty if the sale of the existing property takes place within 36 months.
How much is Stamp Duty on second homes?
Stamp Duty for second and subsequent properties is the basic rate plus 5% of the purchase price.
Basic rates up until 31 March 2025 are as follows:
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
By way of example, if you buy a second home for £350,000, you will pay:
Standard Stamp Duty of 5% of the purchase price between £250,001 and £925,000, ie. 5% of £100,000, which is £5,000.
Surcharge of 5% of £350,000, which is £17,500.
Total stamp duty £22,500. This is an increase of £7,000.
End of first time buyer relief
The government also announced that the temporary reduction for first time buyers introduced in 2022 will end on 31 March 2025, with rates reverting to 2022 figures.
This means that the nil rate band will reduce from £250,000 to £125,000.
For first time buyers, the nil rate band will drop from £425,000 to £300,000. The first time buyer relief will only be available if the transaction value is £500,000 or less.
Contact us
If you would like to speak to one of our expert property lawyers about Stamp Duty on second homes or any other property matter, ring us on 0333 3055 249 or email us at info@leadingpropertylawyers.co.uk.
