Upcoming stamp duty changes for shared ownership: what you need to know

The government has announced significant changes to the Stamp Duty Land Tax (SDLT) that will come into effect on April 1, 2025. These changes are expected to have a substantial impact on shared ownership homebuyers, landlords, and property investors across the country. Here’s a detailed breakdown of what’s changing and how it might affect you, whether you’re buying your first home or looking to upgrade. A breakdown of these changes is essential to help you understand what you can afford and how these changes are likely to affect you. 

What are the new stamp duty changes?

New rules on stamp duty, starting from April 1st, are set to change the way we think about property purchases. These updates will adjust the thresholds and rates that determine how much tax buyers need to pay when buying a home. 

From April 1, 2025, the SDLT thresholds will revert to their pre-September 2022 levels. This means:

  • Nil-Rate Band: The nil rate band will decrease from £250,000 to £125,000.

  • Rates: The rates will be 2% on the portion from £125,001 to £250,000, 5% on the portion from £250,001 to £925,000, 10% on the portion from £925,001 to £1.5 million, and 12% on any amount above £1.5 million

Changes for First-Time Buyers

  • Nil-Rate Threshold: The nil rate threshold for first-time buyers will drop from £425,000 to £300,000.

  • Relief Limit: First-time buyers will only get relief on properties up to £500,000, down from the current £625,000.

  • Impact: This means first-time buyers purchasing a property for more than £300,000 will now pay 5% SDLT on the amount between £300,001 and £500,000.

Impact on Shared Ownership Buyers

  • SDLT Application: The SDLT changes will apply similarly to other residential purchases.

  • Based on Share: Buyers will need to pay SDLT based on the share of the property they are purchasing.

  • Same Thresholds and Rates: The same thresholds and rates will apply, meaning the nil rate band will be £125,000, and the subsequent rates will be 2% on the portion from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% on the portion from £925,001 to £1.5 million, and 12% on any amount above £1.5 million.

Advice for Shared Ownership Buyers

  • Understand Your Liability: When purchasing through shared ownership, it’s important to understand how SDLT will be calculated based on the share of the property you are buying. The SDLT liability will be proportional to the share you are purchasing.

  • Calculate Costs: Use the SDLT calculator from the government to estimate the stamp duty on your share of the property.

  • Seek Professional Advice: Consulting with a mortgage broker or conveyancer can help navigate the complexities of the new SDLT rules and ensure a smooth transaction.

Understanding the SDLT rates

For example, if you are purchasing a 50% share of a property valued at £400,000, your share would be £200,000. The SDLT would be calculated as follows:

  • 0% on the first £125,000 = £0

  • 2% on the next £75,000 = £1,500 Total SDLT = £1,500

For more detailed information, you can visit the official Government SDLT page or use the SDLT calculator to estimate the stamp duty on your property purchase.

Plan for 1st April changes

If shared ownership is something you’re considering, early preparation will allow potential buyers to understand new stamp duty rules once they are in place. Here’s how the process works:

  • Understand Your Eligibility: Look into the shared ownership schemes available in your area, and confirm that you meet their eligibility criteria. Most of these schemes are intended for particular brackets of income and are quite accessible to a larger pool of buyers. Please also keep in mind that some shared ownership properties are available to buyers also currently living in a local area - please check to ensure this is something you are eligible for too - At Aster our shared ownership developments span the South, South West and London. 

  • Calculate Your Costs: This is a great way to get a clear picture of what you might need to pay by checking the updated stamp duty thresholds. By doing this, you can create a more accurate budget and steer clear of any surprises later on.

Looking for some guidance? It’s a great idea to reach out to a mortgage adviser or the team at Aster, who know all about shared ownership. They can walk you through the buying process and help you take the next steps with those new changes. You don’t have to do it alone.

The larger picture

The upcoming changes to stamp duty, may cause additional cost to purchasing your first property, but don’t let this put you off. You can still get on the property ladder with shared ownership by buying a share in your dream home from Aster.  Take a look at our shared ownership homes available and read through the stamp duty changes to make an informed decision around buying your own home. 

Who are Aster?

At Aster, we're proud to offer beautiful new shared-ownership homes across the South of England and London. Our homes are perfect for those looking to get on the property ladder and take advantage of all that these incredible areas have to offer. 

Our aim at Aster is to find you a home, not just a house – and with our fab shared ownership approach, you can find a home in a lovely location that may otherwise be out of your reach, just get in touch!