The last twenty five years has seen enormous growth in the UK’s housing market. Part of the driving force behind the growth in this sector has been the increased demand, partially driven by a growing ‘buy to let’ sector.

With supply lagging far beyond demand from an increasing population, the UK Government have been keen to discourage the small private buy to let investor. From 1. April 2016, anyone purchasing an additional buy to let property must pay at least an extra 3 per cent in stamp duty land tax.

The Treasury has tried to close any loopholes to get around extra stamp duty charges. The changes apply to companies and individuals no matter how many properties you are purchasing.

Stamp Duty Land Tax Surplus for Buy to Let Landlords

Property Price Surplus SDLT Rate
Up to £40,000 0%
Over £40,000 and under £125,000 3%
Over £125,000 and under £250,000 5%
Over £250,000 and under £925,000 8%
Over £925,000 and under £1,500,000 13%
Over £1,500,000 15%

 

For example, prior to April 2016, anyone buying a £200,000 second home or buy to let, paid stamp duty of £1,500. This was based on paying zero per cent on the first £125,000 of the property value and 2 per cent on the portion between £125,001 and £250,000.

From April 2016, landlords had to pay 3 per cent for the first £125,000 and 5 per cent instead of 2 per cent on the amount between £125,001 and £250,000. This could give them a total bill of up to £7,500.

Click here for non Buy to Let Stamp Duty Rates.

However, it’s not just buy to let landlords who have been hit but anyone buying a second home. This even extends to parents buying a property for their children, or a couple purchasing a home together where one is already a homeowner.

Those purchasing a buy-to-let and second homes face the charge, but so do others.
Anyone owning a second property that isn't their main residence and buying another, or replacing the one they don't live in, is also likely to get caught up in the extra tax.

There are a variety of SDLT calculators on the internet.

Related Articles:

Download our Free First Time Buyers Guide

Recent posts

Research from buy-to-let lender, Landbay, shows that UK landlords are looking at raising rents ahead of the Renters' Rights Bill which is due to come into force this year.

Data shows landlords could miss out on green mortgages due to expired energy performance certificates.

Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.

Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.

It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.

There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish. 

The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.

Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months. 

According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.