Stamp Duty has been a hot topic in the news, and with the upcoming changes taking effect on April 1st, 2025, many property buyers will feel the impact of higher taxes when purchasing their home. Now more than ever, Shared Ownership could be a good solution to buying a home and managing costs effectively.
If you’re new to home buying, to Shared Ownership, or even the concept of Stamp Duty, this simple guide will walk you through what it all means for Shared Ownership buyers.
New Stamp Duty rates (from 1st April 2025)
Under the updated rules, Stamp Duty will be applied at the following rates:
- 0% on the first £125,000
- 2% on the next £125,000
- 5% on the next £675,000
- 10% on the next £575,000
- 12% on any remaining amount
First-time buyer relief
Currently, first-time buyers pay 0% on the first £425,000 and 5% on any amount above this on properties worth up to £625,000. However, from April 1st, 2025, this relief will be reduced:
- 0% on the first £300,000
- 5% on any amount above this on properties worth up to £500,000
What does this mean for Shared Ownership?
If you’re buying a new Shared Ownership home, you have two ways to pay Stamp Duty:
- Making a one-off payment based on the total market value of the property
- Paying in stages, where Stamp Duty is paid only on the initial share and later when ownership exceeds 80%
Option 1: One-off payment
With this option, you pay Stamp Duty on the full market value of the property, even if you’re only buying a share. The advantage of this approach is that you won’t have to pay any additional Stamp Duty if you later purchase a larger share.
Option 2: Paying in stages
If you choose this route, you will only pay Stamp Duty on the initial share if it exceeds the threshold. If you decide to buy more shares in the future (a process called staircasing), you won’t owe additional Stamp Duty until your ownership exceeds 80%. Once you surpass this threshold, Stamp Duty is due on the transaction that took you beyond 80% and any future purchases.
First-time buyer relief for Shared Ownership
First-time buyers of shared ownership homes can still benefit from relief. If you opt for a one-off payment, you will pay 0% on the first £300,000 and 5% on the remainder (as long as the total market value is £500,000 or less). If you choose to pay in stages, you will receive the relief on your initial share, meaning if your share costs £300,000 or less, you won’t pay any Stamp Duty initially.
How to decide which option is best for you
Choosing how to pay Stamp Duty depends on several factors, including:
- Whether you’re a first-time buyer eligible for relief
- Your long-term plans—if you intend to staircase beyond 80%
- Your budget at the time of purchase
What to do next
Reviewing your choices and seeking professional guidance will help ensure you make the best decision for your future, depending on your financial situation and your family’s requirements. Contact us if you’d like to find out more about buying a new home with Shared Ownership, and the process involved.