The upcoming changes to Stamp Duty Land Tax are set to affect people up and down the country.
Legal experts, Butterworths Solicitors, investigated how these changes are set to impact the people of Cumbria.
What is Stamp Duty Land Tax?
If you’ve already bought a property, you might be aware of what Stamp Duty Land Tax (SDLT) is.
However, for first-time buyers, this might be another thing to add to the list of terms and expenses you’ve never heard of.
SDLT is a sum of money that you pay to the Government when a house is over a certain price. It’s calculated as a percentage of the house price, so the amount you pay is dependent on the amount that you buy the house for.
SDLT rates are different depending on where someone is on the property ladder. This means that the amount someone pays will be different if they’re a first-time buyer, replacing their current residence, or buying an additional home.
In September 2022, the Conservative Government introduced a temporary change to the SDLT thresholds, which was to try and stimulate the housing market.
However, these changes are coming to an end on March 31 2025 which means people could be hit with an unexpected or increased bill if they buy a house after this date.
How have things changed?
As of the April 1 2025, the thresholds for SDLT are changing. The extent of the impact is dependent on a few things.
Let’s look at how these changes will impact people who are replacing their main residence.
Current rates:
- Up to £125,000 = 0%
- £125,001 – £250,000 = 0%
- £250,001 – £925,000 = 5%
- £925,001 – £1.5 million = 10%
- Above 1.5 million = 12%
New rates:
- Up to £125,000 = 0%
- £125,001 – £250,000 = 2%
- £250,001 – £925,000 = 5%
- £925,001 – £1.5 million = 10%
- Above 1.5 million = 12%
According to Rightmove, the average house price in Cumbria is £229,287.
If you round up and look at the figures, it will give an idea of the difference in price.
If you bought a house for £230,000 on or before March 31 2025, you wouldn’t pay any stamp duty. But if you bought the same house on or after April 1 2025, the bill will be £2,100.
How does this affect first-time buyers?
Despite places like Carlisle remaining one of the most affordable places to live in the UK, with the average property price being £200,000 in June 2024 compared to £349,000 nationally, the changes may still impact first-time buyers as the government hasn’t extended tax relief if their first home is above £300,000.
Current rates:
- Up to £300,000 = 0%
- £300,001 – £425,000 = 0%
- £425,001 – £500,000 = 5%
- £500,001 – £625,000 = 5%
- Above £625,000 = Standard rates
New rates:
- Up to £300,000 = 0%
- £300,001 – £425,000 = 5%
- £425,001 – £500,000 = 5%
- £500,001 – £625,000 = Standard rates
- Above £625,000 = Standard rates
If you’re buying your first home for £350,000 on or before the March 31 2025, you won’t pay any stamp duty. But if you were to buy the same house on or after April 1 2025, you will be paying £2,500.
How does this affect second homeowners?
The increase in the amount to pay in SDLT for second homes isn’t necessarily seen as a negative thing to some.
Liberal Democrat MP for Westmorland and Lonsdale, Tim Farron, said in Parliament in 2018 that excessive second home ownership kills villages, and spoke extensively about how it can be detrimental to local businesses in Cumbria.
He said: “I could list countless other examples in communities such as Hawkshead, Coniston, Grasmere and Dent, each with around 50% of its properties not lived in all year round.
“Then we have Elterwater, with a staggering 85% of its properties owned by those who are absent for most of the year. Members will be unsurprised to hear that Elterwater’s post office closed a few years ago.”
With large numbers of second homeowners in Cumbria, could the changes make a difference to people considering buying a second home this year, and lead to a change in local communities and house prices? Only time will tell.
This is how the rates are changing:
Current rates:
- Up to £125,000 = 5%
- £125,001 – £250,000 = 5%
- £250,001 – £925,000 = 7%
- £925,001 – £1.5 million = 15%
- Above 1.5 million = 17%
New rates:
- Up to £125,000 = 5%
- £125,001 – £250,000 = 7%
- £250,001 – £925,000 = 10%
- £925,001 – £1.5 million = 15%
- Above 1.5 million = 17%
If someone bought a second home on or before March 31 2025 for £250,000, they would pay £12,500 in stamp duty. However, if they bought the same property on the April 1, they would pay £15,000.
It’s worth noting, that in order to avoid paying stamp duty as if you’re buying a second home, the sale of your current property must be completed on the same day you buy your new one. Otherwise, you’ll have to apply for a refund.
Butterworths Solicitors is a local brand of legal experts who are dedicated to making sure their clients are getting the most out of their home buying experience.
Whether you’re a first-time buyer, moving homes or buying another home, they can help.
If you have any specific questions, you can contact them through their website https://butterworths-solicitors.co.uk/ or give them a call on 01228 593939.
- All figures correct at the time of publication
