Budget 2024: Stamp duty change saves first-time buyers as second home owners hit

rates will rise for those buying a second home after Chancellor confirmed major changes in her today.

The Chancellor has left the existing reprieve for first-time homebuyers in place. Present arrangements require new homebuyers to pay a tax on that are worth over £250,000, provided they are the primary and sole residence. The current temporary higher threshold was introduced in September 2021.

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Second home buyers in England and Northern Ireland will see their stamp duty, otherwise known as Stamp Duty Land Tax (SDLT) increase from the current rate of three percent for homes with a purchase price between £40,000 and £250,000. The change will see the rate increased to five percent and comes into effect from tomorrow, October 31.

The current rates for the remaining stamp duty second-home tiers include:

• Between £250,001 and £925,000: 8%
• Between £925,001 and £1.5 million: 13%
• Over £1.5m million: 15%

Rules on stamp duty and the amount people pay depends on where they live in the UK. Stamp duty exists across every home nation, but it is only known as SDLT in England and Northern Ireland. Different rules exist in Wales and , which have different names for the tax.

In Wales, the tax the Land Transaction Tax, and in Scotland, it is part of the Land and Buildings Transaction Tax. Reacting to the news, Money guru said the stamp duty rise is on top of the usual stamp duty rate. He wrote on X, formerly : "Stamp duty extra cost for 2nd homes to rise from 3% to 5% (so that's on top of normal stamp duty) - start TOMORROW."

Economists have so far not reacted well to the news, with Paul Johnson, the director of the Institute for Fiscal Studies, the independent economic research think tank, said raising the stamp duty rate on second homes would ultimately impact renters, who have to foot the bill.

He said: "I have long said stamp duty is among our worst taxes. So what do we have? An increase for those buying second properties. You might think fine: a tax on rich people and landlords. But those looking to rent will pay part of the cost as fewer properties made available. I despair."

But Richard Donnell, Head of Research and Insight at property website Zoopla, said the additional two percent hike to the existing rate would see more second homes hit the market in areas where second home ownership is higher. He said: "The extra 2% cost on buying second homes and investment property will reduce demand from second home buyers and investors.

"Second home buyers are already responding to last year’s Budget which allowed councils to charge double council tax for second homes. This is resulting in a higher level of selling by second home owners. In areas with above average second homes we have seen four times more homes come to the market."

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