Stamp duty on second homes: the complete guide for landlords

If you’re thinking of buying a rental property, there’s a range of costs you’ll need to budget for including stamp duty.

But did you know there are different stamp duty rules for buyers of second homes?

Read on to find out how stamp duty works for landlords, the current tax rates, and how to calculate your total stamp duty bill.

What is stamp duty?

Stamp duty land tax (SDLT) has been in place for hundreds of years and must be paid by all buyers of property or land over a certain price.

When you buy a property, you’ll need to pay a portion of the price to HMRC as stamp duty. The amount you have to pay depends on the price of the property. The higher the price of the property, the more you’ll need to pay in stamp duty.

You’ll need to pay stamp duty whether you’re a first-time buyer, moving between homes, or buying a second home.

The cost of stamp duty can be considerable, so it’s important to factor it into your budget before you buy a property. In most cases, your estate agent or solicitor will manage the process for you and submit your stamp duty return to HMRC.

Stamp duty applies in England and Northern Ireland. There are similar systems in place in Scotland and Wales, respectively known as Land and Buildings Transaction Tax and Land Transaction Tax.

Stamp duty on second homes – how does it work?

New rules for people buying second homes – which includes buy-to-let properties – were introduced in April 2016. On top of their existing stamp duty bill, buyers of second homes were required to pay an extra three per cent. As part of the Autumn Budget 2024, the stamp duty surcharge for buyers of second properties was increased to five per cent.

The higher costs for people who already own properties were designed to make it easier for first-time buyers to get on the property ladder. The extra stamp duty for landlords was announced not long after controversial Section 24 tax changes, which reduced profits for many buy-to-let investors.

Landlord stamp duty rates

When you buy a rental property, you’ll need to pay the normal stamp duty rate plus an extra five per cent. Here’s an overview of the current stamp duty rates:

Property price	Normal stamp duty rate	Second home stamp duty rate
Up to £250,000	0%	5%
£250,001 to £925,000	5%	10%
£925,001 to £1.5 million	10%	15%
Above £1.5 million	12%	17%

Stamp duty is paid in portions. This means that you’ll pay the rate of stamp duty that applies for each portion of the property price. For example, a buyer of a property worth £400,000 would pay the stamp duty rate that applies up to £250,000 and then the stamp duty rate that applies on the remaining £150,000.

Buy-to-let stamp duty example

If you’re planning to expand your portfolio or buy your first rental property, stamp duty could be a significant extra cost. Buyers of the most expensive second homes are required to pay 17 per cent of the property price above £1.5 million.

However with the average UK house price sitting at £265,738 in October 2024, according to Nationwide, let’s look at a more common example.

If you’re buying a rental property for £265,738, you’ll pay:

• five per cent on the first £250,000 = £12,500
• 10 per cent on the remaining £15,738 = £1,573
• total stamp duty bill = £14,073

Before 31 October 2024, the bill would have been £5,314 lower at £8,759

Buy-to-let stamp duty calculator

It’s important to calculate your estimated stamp duty bill before you buy a property to avoid being hit with any unexpected costs.

You can use the stamp duty calculator on the government website to work out how much you’re due to pay.

There are several questions you’ll need to answer, such as whether the property is a second home, the estimated completion date, and whether it’s freehold or leasehold.

You’ll then get a total of how much stamp duty you’ll need to pay, plus a detailed calculation of how much tax is due for each band.

Stamp duty on buy-to-let for overseas landlords

Buyers of second homes who are based abroad have to pay an extra surcharge on top of the five per cent additional rate.

The stamp duty surcharge for overseas buyers is two per cent. As a result, these buyers will pay seven per cent more than a standard UK buyer.

What are the stamp duty rules for landlords in other parts of the UK?

In Scotland, Land and Buildings Transaction Tax (LBTT) replaced stamp duty in 2015.

LBTT has bands similar to stamp duty. For example, there’s a two per cent charge on the price of a property between £145,001 and £250,000, rising to five per cent for the cost of a home between £250,001 to £325,000.

Buyers of second homes in Scotland have to pay an Additional Dwelling Supplement (ADS) on top of their LBTT. ADS is charged at six per cent of the total purchase price above £40,000.

So a landlord buying a rental property in Scotland for £275,000 would have to pay the following:

• zero per cent on the first £145,000 = £0
• two per cent on the price between £145,001 and £250,000 = £2,100
• five per cent on the price between £250,001 and £275,000 = £1,250
• six per cent of the total purchase price above £40,000 = £14,100
• total tax bill = £17,450 (£3,350 in LBTT and £14,100 in ADS)

In Wales, Land Transaction Tax (LTT) replaced stamp duty in 2018.

The rates for LTT are similar to stamp duty, going up to 12 per cent for the portion of a property’s price over £1.5 million.

As an example, if a landlord buys a rental property in Wales for £375,000 they’ll pay:

• four per cent on the first £180,000 = £7,200
• 7.5 per cent on the price between £180,001 and £250,000 = £5,250
• nine per cent on the price between £250,001 and £375,000 = £11,250
• total LTT bill = £23,700

Stamp duty changes – what do landlords need to know?

In recent years, stamp duty rates have changed on several occasions. The current stamp duty rates were set in October 2022 as part of the now infamous mini-Budget.

From April 2025, the stamp duty threshold will drop back down to £125,000. This means landlords’ stamp duty bills will rise again following the two per cent rise introduced in October 2024. 

Landlords should remain prepared for further stamp duty changes as part of financial updates like Budgets and Autumn Statements.

Buy-to-let stamp duty FAQs

Working out second home stamp duty costs can be complicated and costly, so make sure you speak to an estate agent or buy-to-let specialist before making any decisions.

Below we’ve answered some frequently asked questions on paying stamp duty when buying a second property.

Do first-time buyers have to pay stamp duty on a buy-to-let?

If you decide that you want to buy an investment property as your first step on the housing ladder, it’s likely you won’t have to pay higher stamp duty rates.

However, it’s important to note that you won’t benefit from stamp duty relief for first-time buyers as the property won’t be your main residence.

Do you have to pay stamp duty if you buy a property before your other one sells?

If you already own a property that hasn’t sold before you buy a new one, you’ll have to pay the three per cent stamp duty surcharge.

If your original property is sold within 36 months, you can claim a full refund of the extra stamp duty from HMRC.

Can married couples avoid paying higher stamp duty rates?

Married couples are considered as one entity by HMRC. If a married couple or civil partners buy a property and subsequently own two or more properties, they’ll need to pay higher stamp duty rates (even if one property is in each person’s name).

On the other hand, if you’re not married but decide to buy a second property with your partner, you could avoid paying extra stamp duty if the existing property is owned in one person’s name and the new investment property is named solely in the other’s name.

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