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Buy-to-let stamp duty: How much will you have to pay?

View profile for Melanie Leadbitter
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Thousands of pounds of extra stamp duty taxes will become due from second homes and buy-to-let investors when they buy a property following the announcement by the government of a “landlord" stamp duty tax which will apply from April 2016.

From April, standard stamp duty rates are to be loaded by three percent (3%) for persons other than those buying a property to live in.

The additional stamp duty rates will apply not only to those persons who already own property in the UK but to those who own property worldwide. Therefore anyone owning a second property which is not their main residence and buying another (or replacing the one they do not live in) is likely to fall foul of the changes.

Therefore if you still own your existing main residence property at the time of completion of your new property, you will still be charged the additional stamp taxes. However in order to assist those who suffer delays in the selling process of their existing main residence property the government have confirmed that as long as you subsequently complete a sale of your existing main residence property within 18 months of the completion date of your new property, you can apply for a refund of the additional 3% stamp taxes payment.

The increased stamp duty rates will also apply to persons buying second properties for purposes such as holiday homes, in which the owners do not intend to live full-time.

Purchasers of additional properties will have to effectively opt in to the higher rates by declaring that the acquired property will not be their primary residence.

The increased rates will not apply to corporate or fund purchasers that make significant investments in residential property. The government consultation is currently considering whether the ownership of more than 15 residential properties is appropriate as a "significant investment" for these purposes.

Houseboats, caravans, homes purchased for under £40,000 and some multiple purchases as referred to above are also expected to be exempt.

Therefore, the following Stamp Duty Land Tax (SDLT) rates will apply on a progressive basis to acquisitions of second properties.

  • £0 to £40,000: 0%
  • £40,001 to £125,000: 3%
  • £125,001 to £250,000: 5%
  • £250,001 to £925,000: 8%

Check if the purchase of your new property is liable to the additional stamp duty tax rates by copying the following link to your browser

For further information please contact our conveyancing specialist Kevin Britton on 01422 339 622.