Stamp Duty for Buy to Let

Stamp duty tax liability for anyone purchasing an additional property has increased from October 2024.

Stamp duty for buy to let property

This means the majority of buy to let purchases now attract an additional 5% stamp duty surcharge. There is a lower starting threshold of £40,000 which means nearly all buy to let transactions will now be subject to SDLT.

Above the £40k threshold, the higher stamp duty rate will apply to all buy to let purchases unless total individual ownership is limited to a single dwelling, ie the purchaser does not already own other residential property.

Stamp duty changes in 2024

In the 2024 Autumn Budget, the Chancellor Rachel Reeves announced an increase to the additional property and second home SDLT surcharge from 3% to 5%. The surcharge is applied on top of the standard SDLT rate.

Existing property owners

For someone who already owns a buy to let property, who wishes to purchase another one to rent out, the higher SDLT rate will now apply. The higher SDLT rate will also apply if they decide to buy any additional residential property, unless it is to be used to replace their existing main residence.

Similarly for someone who already has a main residence, who wishes to purchase an additional property to let out, the higher SDLT rate will apply.

Moving house

Replacing a main residence

In most cases someone already owning a buy to let property, who wishes to move house, should not be liable for the higher SDLT rate. This is because there is no retrospective tax to pay on the existing buy to let property, and the owner plans to replace their main residence.

Similarly a property investor who already owns multiple buy to let properties should not be liable for the higher rate of stamp duty if they decide to move. Again this is because the owner plans to replace their main residence and there is no retrospective tax to pay on their existing buy to let portfolio.

An individual who owns a buy to let property, and who has sold their main residence, will have up to 36 months to buy a new one without paying the higher stamp duty rate. This is because ultimately they will have replaced their main residence at the end of the moving process. The grace period has been increased from the 18 months to 36 months to reflect "moving in difficult circumstances".

Keeping a former main residence

For someone who wishes to move house but decides not to sell their existing home at the same time, the higher rate of SDLT will apply. This is because even though they are replacing their main residence with a new one, at the end of the process they will own 2 properties. If the previous property is then sold within 36 months a refund of the higher SDLT rate can be applied for.

If someone decides to buy a new home as a main residence, but wants to rent out their existing home instead of selling it, they will be liable for the higher SDLT rate. This is because they will own 2 properties at the end of the process.

For a definition of a "main residence" for stamp duty purposes please refer to our stamp duty for second homes section.

First time buyers

If parents, who are homeowners themselves, wish to help their children buy their first home they could now face the higher rate of stamp duty.

In this scenario if the parents take out a joint mortgage with their children they will appear on the deeds. Legally the parents now own a second property. However if the parents simply help with the deposit or act as a guarantor then the higher SDLT rates do not apply.

Married couples & civil partners

The higher rate of tax will apply to married couples and civil partners if one person in the relationship already owns a property.

In this scenario people who are married or in a civil partnership are treated as a single entity for SDLT purposes.

Married couples living separately, who are separated in circumstances that are likely to be permanent, will be treated as individuals and not as one entity when calculating Stamp Duty liability.

Unmarried couples & joint purchasers

The Government has now confirmed the following position with regards to joint ownership: "The joint purchase of a property that is an additional property transaction for one or more of the joint purchasers is considered to be the purchase of an additional property and thus the higher rates will apply"

For stamp duty purposes this means joint purchasers will be treated as a single entity, the same as for married couples and civil partners.

Limited companies

The SDLT surcharge will generally apply to additional property being purchased by limited companies. This applies to both existing companies and newly formed companies for the purpose of purchasing additional property.

Overseas property

Property owned abroad will now be taken into account when determining whether a property purchased in England, Wales or Northern Ireland is an additional property.

This applies to residential property owned anywhere in the world and includes second homes and furnished holiday lets.

Additional property exemptions

Mobile homes, caravans and houseboats will be exempt and in most cases inherited property and annexes do not count as additional property. Plots of land are also exempt as these are not categorised as "residential property" even if future residential development is planned.

Please refer to our stamp duty for second homes section for more information.