"We should expect to see a flurry of activity as buyers look to complete deals before the SDLT thresholds change on 1 April. Indeed, at CHL Mortgages, we’re already seeing an uptick in enquiries, especially ones requiring a greater degree of urgency"
- Ross Turrell - CHL Mortgages
Three months on, the policies and reforms announced in the Chancellor’s Budget last October are still steadily permeating through the property market.
Although there are often knee-jerk reactions and market fluctuations in the immediate aftermath of major fiscal statements, these events take time to properly influence the plans of buyers and sellers alike. The devil is in the detail, as they say, and so it’s taken many weeks for stakeholders across the UK property sector to unpack the contents of Rachel Reeves’ speech and, in turn, to fully understand what the likely ramifications are going to be.
However, in these early weeks of 2025, there’s one reform that’s already having an effect: Stamp Duty Land Tax thresholds.
Understanding the changes
There were a number of SDLT changes unveiled in the Budget, and property buyers are still coming to grips with them. Indeed, over the past month, the number of people searching for ‘stamp duty’ has purportedly risen by 38%1, with more than a million online searches recorded for this term.
So, it makes sense to begin with a brief summary of how SDLT is changing.
Firstly, the government has halved the nil-rate band; whereas buyers would previously pay no stamp duty on the first £250,000 of a purchase, as of 1 April 2025, this will be cut to £125,000. Put in real terms, this means that every property purchase over £250,000 will be subject to an additional £2,500 in SDLT2.
For landlords and property investors, this change effectively means a new band will be added to the SDLT thresholds for additional property purchases as of 1 April this year. Of course, this follows the reforms brought in as of midnight on 30 October 2024, the night of the Budget, when the surcharge for additional property purchases increased from 3% to 5%.
This means that as of 1 April 2025, landlords and investors will pay the following rate of SDLT:
Despite speculation to the contrary, Labour did not change the SDLT surcharge paid by non-UK residents. It remains at an additional 2%.
Potential rush to get deals done
Changes to SDLT have a material impact on the UK property market. We saw during the pandemic that the so-called ‘stamp duty holiday’ greatly stimulated activity, encouraging buyers to pursue their next purchase. Similarly, increasing the amount of SDLT that has to be paid – by changing rates, band thresholds or surcharges – will influence people’s decisions.
However, it’s certainly not as doom and gloom as many headlines will suggest. The SDLT reforms fast approaching at the start of April will not necessarily stymy market activity; it’s more likely that it will be reflected in sale prices in the medium- and long-term. From first-time buyers right through to seasoned portfolio landlords, the purchaser will simply alter the amount they can or will spend on a property to account for the extra SDLT they will need to pay at the end of the deal.
In the short term, meanwhile, we should expect to see a flurry of activity as buyers look to complete deals before the SDLT thresholds change on 1 April. Indeed, at CHL Mortgages, we’re already seeing an uptick in enquiries, especially ones requiring a greater degree of urgency.
February and March therefore reflect a critical period for lenders, brokers and buyers alike. Ensuring property purchases can be completed at speed is of utmost importance – there are many buyers who, should the deadline of 31 March be missed, may need to renegotiate the price or even consider pulling out of an acquisition.
What must lenders and brokers do?
Lenders and brokers have to work closely together during this important window. In particular, there are three important considerations for both parties.
1. Clear communication is imperative
With time of the essence, clear and direct communication between lender and broker is pivotal. From the moment an application is submitted, there must be open dialogue about the client, their situation, the property in question, and the suitable products available.
Fast, clear communication will allow the lender to complete Know Your Customer (KYC) checks perform due diligence without undue delays and move ahead with delivering the best product for the borrower in question.
2. Start the process as early as possible
This is perhaps best directed at the borrowers themselves, but it’s imperative that the process of engaging a broker and lender starts as early as possible.
Again, ensuring KYC and due diligence can be completed in a timely fashion will allow for a smoother timeline, so one of the key traps to avoid is for the purchaser to only begin speaking with a broker – and the broker, in turn, only contacting a lender – once the property-buying process is more advanced.
3. Finding the right lenders for the right borrower or property type
We know that one of brokers’ biggest pet hates is being dragged along by a lender that then walks away from a case – or at the very least having to wait several days just to receive a hard ‘no’ from a lender. This wastes time and can create tension with their client.
The solution is to approach the right lender for the case in hand. Of course, experienced brokers will know which lenders are best placed to handle different types of cases, either based on the property being purchased or the profile of the borrower. Aligning the case with the lender will be vitally important in the next two months, resulting in the best possible chance that the application is successful and the process is as painless as possible.
Having been a prominent lender in the buy-to-let market for over 20 years, CHL Mortgages has established its specialisms, such as HMOs to MUFBs, as well as more standard buy-to-let purchases.
Ultimately, the skill and experience of a lender dictate which cases they’re well positioned to deliver on, so having those strong relationships with brokers – meaning they understand when best to approach a particular lender – is going to be of utmost importance amid the potential rush to complete on transactions ahead of the stamp duty changes.
As ever, challenges like the incoming SDLT reforms present an exciting opportunity for the cream to rise to the top; the specialist finance sector has proven its ability to help brokers and investors navigate a wide range of obstacles, and I’m confident this will shine through again between now and 1 April 2025.
