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| Stamp duty tax on second homes to rise | Stamp duty tax on second homes to rise |
| (about 8 hours later) | |
| The rate of stamp duty paid by people buying a second home is to rise, Chancellor Rachel Reeves has announced in the Budget. | The rate of stamp duty paid by people buying a second home is to rise, Chancellor Rachel Reeves has announced in the Budget. |
| Stamp duty is a tax paid when buying property over a certain price in England and Northern Ireland. | Stamp duty is a tax paid when buying property over a certain price in England and Northern Ireland. |
| People buying an additional property are already subject to a higher rate, and from Thursday this will rise from from an extra 3% to 5%. | People buying an additional property are already subject to a higher rate, and from Thursday this will rise from from an extra 3% to 5%. |
| The Treasury said the move would give first-time buyers and those looking to move house an advantage over second-home buyers and landlords, resulting in 130,000 additional transactions by these groups over the next five years. | The Treasury said the move would give first-time buyers and those looking to move house an advantage over second-home buyers and landlords, resulting in 130,000 additional transactions by these groups over the next five years. |
| It said the increase would also raise more than £1.2bn in tax up to 2029-30. | It said the increase would also raise more than £1.2bn in tax up to 2029-30. |
| Reeves unveils historic £40bn tax rises in first Budget | |
| Stamp duty: What is it, how much is it and how is it changing? | |
| Budget 2024: Key points at-a-glance | |
| However, analysts say the increased rate could affect landlords' willingness to buy more properties. | However, analysts say the increased rate could affect landlords' willingness to buy more properties. |
| Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters would "pay part of the cost" of the increase in stamp duty for second-home buyers and landlords "as the supply of such properties falls". | Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters would "pay part of the cost" of the increase in stamp duty for second-home buyers and landlords "as the supply of such properties falls". |
| Ben Beadle, chief executive of the National Residential Landlords Association, said: "The chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up. | Ben Beadle, chief executive of the National Residential Landlords Association, said: "The chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up. |
| "What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents." | "What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents." |
| But Ben Twomey, chief executive of campaign group Generation Rent, said: "Renters who have been able to save a deposit to buy a home will get a boost from the increased stamp duty surcharge. | But Ben Twomey, chief executive of campaign group Generation Rent, said: "Renters who have been able to save a deposit to buy a home will get a boost from the increased stamp duty surcharge. |
| "The higher costs for investors will make it easier for first-time buyers to compete in the house sales market." | "The higher costs for investors will make it easier for first-time buyers to compete in the house sales market." |
| Meanwhile, first-time buyers will be hit by the government's decision not to extend the relief on stamp duty for people buying their first home. | Meanwhile, first-time buyers will be hit by the government's decision not to extend the relief on stamp duty for people buying their first home. |
| The Conservatives raised the threshold for when first-time buyers pay stamp duty from £300,000 to £425,000 in 2022, while the threshold for other buyers was doubled to from £125,000 to £250,000. | The Conservatives raised the threshold for when first-time buyers pay stamp duty from £300,000 to £425,000 in 2022, while the threshold for other buyers was doubled to from £125,000 to £250,000. |
| However, the thresholds will revert back to the lower levels from 31 March. | However, the thresholds will revert back to the lower levels from 31 March. |
| Ben Thompson, deputy chief executive of the Mortgage Advice Bureau, criticised the move. | Ben Thompson, deputy chief executive of the Mortgage Advice Bureau, criticised the move. |
| "People will simply choose not to move, continue to be stuck renting with all the uncertainty that that brings," he said. | "People will simply choose not to move, continue to be stuck renting with all the uncertainty that that brings," he said. |
| "With house prices rising, many more buyers will end up with a stamp duty bill, or face paying even more." | "With house prices rising, many more buyers will end up with a stamp duty bill, or face paying even more." |
| The current rates of stamp duty are: | The current rates of stamp duty are: |
| £0-£250,000 (£425,000 for first-time buyers) = 0% | £0-£250,000 (£425,000 for first-time buyers) = 0% |
| £250,00-£925,000 = 5% | £250,00-£925,000 = 5% |
| £925,001-£1.5m = 10% | £925,001-£1.5m = 10% |
| £1.5m+ = 12% | £1.5m+ = 12% |
| From Thursday, people buying a second home will pay an extra 5% on top of this. | From Thursday, people buying a second home will pay an extra 5% on top of this. |
| Elsewhere, the Budget included a £500m boost in funding for the Affordable Homes Programme, which the government said would deliver up to 5,000 new social and affordable homes. | Elsewhere, the Budget included a £500m boost in funding for the Affordable Homes Programme, which the government said would deliver up to 5,000 new social and affordable homes. |
| Reeves also confirmed the government would reduce Right to Buy discounts in a bid to increase the supply of council housing. | Reeves also confirmed the government would reduce Right to Buy discounts in a bid to increase the supply of council housing. |
| The Right to Buy scheme allows tenants renting council-owned homes to buy them at a discounted rate. | The Right to Buy scheme allows tenants renting council-owned homes to buy them at a discounted rate. |
| The chancellor said councils would also be able to keep 100% of the money raised from sales of housing so this could be reinvested into new supply. | The chancellor said councils would also be able to keep 100% of the money raised from sales of housing so this could be reinvested into new supply. |