Housing Changes Coming in 2025

The government's autumn budget introduced a number of new measures that will affect house owners and renters. Many of those changes are due to come in to force this April, so let's take a look at them...

Stamp Duty Rates Significantly Increased

Home buyers in both England and Northern Ireland are likely to pay more for stamp duty land tax (SDLT) when purchasing from April 2025 onwards. The tax is due when buying a freehold, leasehold or shared ownership of a property. Early evidence suggests that buyers have been rushing to complete their transactions in early 2025, to get in before the hike.

The initial 0% band for non-first-time buyers has been reduced significantly, from £250,000 to just £125,000. Buyers will now have to pay tax of 2% on the amount between £125,000 and £250,000, potentially adding £2,500 SDLT to their moving costs for an average priced home.

There are potential higher rate SDLT rates also for buyers of second homes, even if the other house is held in your married partner's name. The allowances for this have also been reduced from April 2025. More details on rates for additional homes are available on the government website here.

For Wales, rates are unchanged - the higher residential rate of Land Transaction Tax (LTT) was already increased by 1% back in December 2024.

In Scotland, no changes are currently due to Land and Buildings Transaction Tax (LBTT). However, the charge on second/additional homes was raised in December 2024 from 6% to 8%. There is a review of the LBTT system currently starting in Scotland, but changes are not expected until the next Parliament.

New Funding for Affordable Home Building

Another announcement from the budget was an increase in funding for home building - a pledge to deliver 33,000 new homes with £128million pledged by the government for housing projects.

It also pledged £500million in extra funding for the existing Affordable Homes Programme, with money allocated via the scheme to Local Authorities and Housing Associations to produce affordable housing for both sale and rent.

Caps on Universal Credit Charges for Rent Arrears

Before the budget, landlords with tenants who were in rent arrears could apply to have those arrears taken directly from the tenant's Universal Credit (UC), at a rate of up to 25% of their UC amount. This deduction could also be used for other household debts such as council tax and utility bills.

This rate has now been reduced to 15% and will be known as the Universal Credit Fair Repayment Rate, putting less financial strain on UC recipients who are in debt. It will however lead to longer repayment terms, and comes as a blow to landlords, councils and energy providers who are awaiting unpaid rent and bills.

The Work and Pensions Secretary has also announced a review into the system, following a court case where tenant Nathan Roberts was ruled to have been made to repay unfairly. The system currently approves repayments automatically without the tenant's knowledge or consultation, and this is the part of the system likely to be scrutinised.

Changes to Personal Finances

While not affecting housing directly, we should wrap up this post with a mention of a couple of changes to household income. From April 2025, the National Living Wage will increase by 6.7%, Universal Credit will rise by 1.7%, and State Pension by 4.1%, all giving a boost to household income.

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