Now that Rachel Reeves has officially unveiled the Autumn Budget, we finally have confirmation on the changes being implemented by this Labour Government.

One of the standout updates is the immediate increase in Stamp Duty Land Tax (SDLT) for Additional Dwellings, rising from three to five per cent.

This news has not been well received by second-home buyers or landlords, many of whom are now reconsidering their investment strategies.

Higher prices for second homes

Some people dream of owning a second home, whether it is a countryside retreat or a city investment, but this dream has just become more expensive.

For example, if the second home you plan to purchase is valued at £300,000, you would face a £17,500 SDLT payment.

This is not an insignificant amount, especially when you factor in the other costs associated with buying property, such as legal fees, surveys, and maintenance.

This increase could deter many from entering the buy-to-let market or purchasing their second home.

Why have the Government increased SDLT?

While the increased SDLT aims to discourage the purchase of second homes and buy-to-let properties to free up housing stock for first-time buyers, other announced challenges may hinder this objective.

For instance, the Government has decided to end the temporary rates of relief introduced in 2022, which will revert SDLT rates to those in place prior to these changes by March 31, 2025.

This includes the First-time Buyers’ Relief nil rate band returning to £300,000 and the maximum transaction value for First-time Buyers’ Relief reverting to £500,000.

These changes could further complicate efforts to achieve the initial intention of increasing housing availability.

What indirect implications could an increase in SDLT have on second properties?

As buy-to-let investors pull back, there may be a reduction in the supply of rental properties.

This could lead to increased rental prices for existing landlords who may find themselves with less competition, meaning tenants may face higher living costs.

Additionally, if second homes and buy-to-let properties do become less attractive, we could see a shift towards developers choosing to build more affordable housing to cater to first-time buyers and families.

The increased SDLT for second-home purchasers not only affects individual buyers but also has broader implications for the housing market, rental prices, and property development trends.

With the recent changes in mind, understanding your options is crucial for making informed decisions.

Whether you are buying your second home, selling your house or apartment, or exploring buy-to-let opportunities, we offer tailored advice to guide you through every step of the process.

Contact our residential property solicitors today.