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.
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