Major stamp duty change announced in Budget - and it starts this week

Chancellor Rachel Reeves announced notable alterations in her Budget today, including an increase in the stamp duty rates for purchasers of second homes. Stamp duty, a tax levied on property purchases within the UK, operates with varying criteria for first-time buyers, those moving homes, and individuals buying additional properties.

From October 31, second home buyers in England and Northern Ireland will face a heightened stamp duty rate, jumping from 3% to 5%. The devolved administrations in Wales and Scotland have their distinct systems and designations for similar taxes: Land Transaction Tax in Wales and Land and Buildings Transaction Tax in Scotland.

Commenting on the changes, financial expert Martin Lewis highlighted the added cost for second home buyers, tweeting: "Stamp duty extra cost for 2nd homes to rise from 3% to 5% (so that's on top of normal stamp duty) - start TOMORROW."

Paul Johnson, director of the Institute for Fiscal Studies, critiqued the increase, suggesting that this could negatively affect renters who may bear the cost consequences. He remarked, "I have long said stamp duty is among our worst taxes. So what do we have? ".

One critic expressed frustration, saying: "An increase for those buying second properties. You might think fine: a tax on rich people and landlords. But those looking to rent will pay part of the cost as fewer properties made available. I despair."

However, Richard Donnell, Head of Research and Insight at property website Zoopla, countered that the hike would lead to more second homes being put up for sale, particularly in areas with high levels of second home ownership. He explained: "The extra 2% cost on buying second homes and investment property will reduce demand from second home buyers and investors."

Donnell added that second home buyers are already reacting to last year's Budget, which permitted councils to double council tax for second homes, resulting in a surge of second home owners selling their properties.

In areas with a high concentration of second homes, four times more homes have come onto the market.