New stamp duty rules will come into effect in the wake of Rachel Reeves' Budget. (Image: Getty)
Chancellor Rachel Reeves has announced a major stamp duty change that will come into effect from tomorrow as part of Labour's first Budget in nearly 15 years.
The stamp duty surcharge on second homes, including buy-to-lets and holiday homes, will increase from 3 percent to 5% at midnight tonight.
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Reeves said: "In our manifesto we committed to reforming stamp duty land tax to raise revenue while supporting those buying their first home.
"We are increasing the stamp duty land tax surcharge for second homes known as the Higher Rate for Additional Dwellings by two percentage points, to 5%, which will come into effect from tomorrow.
"This will support over 130,000 additional transactions from people buying their first home, or moving home over, the next five years."
READ MORE: How much extra you will pay for a house in Stamp Duty change from Thursday
Rachel Reeves announced a stamp duty increase on second homes. (Image: Getty)
She stressed that the increase in stamp duty rates will only affect second home buyers, landlords buying-to-let properties, and commercial business properties.
If the property is valued at ￡125,000 to ￡925,000, the buyer will pay no tax on the first ￡125,000, and now, five per cent tax on any remaining value. This means someone buying a house worth ￡700,000 would pay a ￡28,750 tax bill - 5% of ￡575,000.
This move has been slammed by experts who have accused Reeves of sending "shockwaves through the property industry" as landlords tackle the cost increase.
Ben Perks, Managing Director at Orchard Financial Advisers commented: "The Chancellor may have just killed off the buy-to-let market with immediate effect.
"A 2% rise in Stamp Duty by tomorrow will cause shockwaves throughout the property industry. Anyone completing on a buy-to-let purchase tomorrow has to find a few thousand pounds to continue, and this just won't be possible for many landlords.
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"It’s a wider issue than first thought, though. Any chain with a buy-to-let purchase within it is now in a highly precarious position."
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Separately, stamp duty concessions on buying a house are set to be cancelled in a move that could add up to ￡15,000 to the cost.
The concessions meant there was no stamp duty for first-time buyers on the first ￡425,000 of a property’s value, which applied to all homes worth up to ￡625,000.
However, this will revert back to an original regime where the stamp duty threshold for first-time buyers will come back down to ￡300,000 and only apply to properties worth up to ￡500,000.