Stamp Duty Increase on Buy-to-Let: What It Means for Investors

The Chancellor’s October Budget introduced a stamp duty surcharge hike for second properties, increasing from 3% to 5% overnight. The move was aimed at discouraging buy-to-let investments and second-home purchases, supposedly to give first-time buyers an advantage. However, new data suggests that this policy has done little to curb investor interest.

Buy-to-Let Investors Push Forward Despite Higher Stamp Duty

Leading law firm LCF Law’s conveyancing division, LCF Residential, reported that every single property transaction involving buy-to-let investors or second-home buyers during the Budget announcement proceeded as planned. This suggests that the additional 2% surcharge has not deterred investors from continuing their property purchases.

Julie Davis, head of LCF Residential, stated:

“People buying second homes or investment properties were already used to paying higher stamp duty rates. Adding an extra 2% hasn’t made a noticeable difference so far. Every transaction we were handling for investors still went ahead.”

Will This Change the Market for First-Time Buyers?

The government hoped that these stamp duty changes would level the playing field for first-time buyers, making homeownership more accessible. However, as of now, the market has not shown any significant shift in favour of first-time buyers over property investors.

Upcoming Stamp Duty Changes: What You Need to Know

Looking ahead, property buyers should be aware that from 1st April 2025, stamp duty rates will change again as the temporary thresholds introduced in 2022 come to an end:

• Currently, homebuyers don’t pay stamp duty on properties under £250,000, but this will revert to £125,000 in April 2025.
• First-time buyers currently benefit from an exemption up to £425,000, but this will drop to £300,000.
• These changes will particularly impact buyers in higher-value markets such as London and the South East.

What This Means for UK Property Investors

‍For seasoned investors, the increase in stamp duty appears to be a minor inconvenience rather than a dealbreaker. Property investment remains a strong and stable asset class, and with the upcoming changes in 2025, now might be a strategic time to invest before the thresholds are lowered.Interested in making your next buy-to-let investment? Visit Regency Invest to explore lucrative opportunities.