What do stamp duty changes mean for Shared Ownership?
31 January 2025
Buying a new home can involve several charges and fees, including stamp duty. With stamp duty changes coming into effect from 1st April, 2025, let’s look at how your costs could be impacted when purchasing shares of a Shared Ownership home.
What is stamp duty?
Stamp duty is a tax paid to HMRC when a home buyer purchases a property in the UK. The amount of stamp duty that you’re required to pay depends on several factors, such as the value of the property, your location within the UK and personal circumstances.
For example, stamp duty for first-time buyers is capped in a way that makes it more affordable than those buying their second home, known as ‘first-time buyer relief’. This is to incentivise home ownership, and make it easier for first-time buyers to get on the property ladder.
How does stamp duty work for Shared Ownership homes?
When purchasing a property on the open market, you’re required to pay stamp duty on the total value of your new home. If you’re purchasing shares of a Shared Ownership property, however, you have a couple of options when it comes to stamp duty:
- You can choose to pay stamp duty on the full value of your home, and effectively get this financial lump sum out of the way early. This option also means you won’t need to pay stamp duty after, even if you staircase to a larger share down the line.
- You can pay stamp duty on the share you’ve purchased, instead. If you’re buying a 10% share in a £250,000 home, this may mean you won’t pay any stamp duty as part of your initial purchase.
If you opt for the second option – commonly known as ‘paying in stages’ – you’ll only start paying stamp duty once you have increased your shares above 80% through staircasing.
A solicitor or financial advisor will be able to break down the exact costs for you, but stamp duty payments on ‘staircased’ shares are calculated based on whatever the stamp duty rate is at the time of the transaction.
How is stamp duty changing in 2025?
Back in September 2022, the UK government announced a temporary increase to the thresholds above which stamp duty needed to be paid. This will change as of the 1st of April, 2025, which means that any home purchases completed after the change will be subject to the new tax rates.
The stamp duty changes are based on a property’s value, and are as follows:
| Previous stamp duty rates | Rates after 1st April, 2025 |
| 0% up to £250,000 | 0% up to £125,000 |
| 5% on £250,001 to £925,000 | 2% on £125,001 to £250,000 |
| 10% on £925,001 to £1.5 million | 5% on 250,001 to £925,000 |
| 12% on homes over £1.5 million | 10% on £925,001 to £1.5 million |
| 12% on homes over £1.5 million |
To work out how much stamp duty is on your home purchase, the government has a stamp duty calculator that you or your solicitor can use.
As an example, however, let’s say you’re buying a home valued at £250,000. You’re not a first-time buyer in this instance, so the standard stamp duty rates apply. The stamp duty calculation on the full value of your property works out as follows:
- You pay 0% on the first £125,000
- You pay 2% up to £250,000, which leaves £124,999 in consideration
- Your stamp duty is calculated as 2% of this consideration, which equals £2,499.98
Is stamp duty changing for first-time buyers?
Along with stamp duty changes for subsequent home purchases, stamp duty for first-time buyers is also changing as of the 1st April, 2025.
Previously, first-time buyers wouldn’t pay stamp duty on a property valued up to £425,000. This is changing, with the figure coming down to £300,000. The full changes are as follows:
| Previous stamp duty rates | Rates after 1st April, 2025 |
| 0% up to £425,000 | 0% up to £300,000 |
| 5% on £425,001 to £625,000 | 5% on £300,001 to £500,000 |
How can I save money on stamp duty for a Shared Ownership home?
As mentioned above, these stamp duty changes are coming into effect from the 1st April, 2025. This means that any house purchases completed before this date will be subject to the current stamp duty tax calculations.
If you’re a first-time buyer and find a Shared Ownership property you like valued at less than £425,000, you can avoid paying stamp duty entirely as long as you complete the purchase before the April deadline.
If you already own a home and are looking to make a shift to Shared Ownership, you’ll be able to save on all stamp duty costs for properties valued below £250,000. Once the new rates come into effect, this is halved to £125,000.
It’s important to consider the length of time it can take to buy a new home, however, as this may impact whether you’re able to complete the sale before the April deadline.
Ready to get on the property ladder?
If you’d like to learn more about Shared Ownership and get the keys to your new home as soon as possible, we’d love to hear from you. Reach out to our friendly team today, and browse our available properties to find the right home for you.
