What is stamp duty for buy-to-let properties?
Key takeaways
Landlords and other second home owners have been paying higher rates of stamp duty – the ‘stamp duty surcharge’ – since April 2016
From 31 October 2024 the stamp duty surcharge, paid on second home purchases in England and Northern Ireland, went up from 3% to 5%.
Landlords now pay stamp duty rates from 5% to 17% of the property purchase price
What is stamp duty on buy-to-let properties?
Assuming they already own a property, most buy-to-let (BTL) landlords will pay the stamp duty surcharge when they buy a property to let out.
This is a 5% surcharge on top of the standard residential rates.
The surcharge was introduced to make it more difficult for investors to outbid first-time buyers and push up house prices.
You should factor the stamp duty surcharge, and other tax payments, into your calculations if you decide to become a buy-to-let landlord.
What is stamp duty?
Stamp Duty Land Tax (SDLT) is a mandatory tax that is applied when purchasing a property or land in England and Northern Ireland.
The amount of stamp duty depends on several factors, including:
the property value
whether it’s a primary residence or a second home
if the buyer is a first-time homebuyer
Stamp duty is generally paid within 14 days of completing the property purchase. If you're taking out a mortgage, your solicitor will typically handle the stamp duty payment for you.
Stamp duty applies to both freehold and leasehold properties, and also to shared ownership properties. It also applies whether you’re buying outright or with a mortgage.
What is the 5% Stamp Duty Land Tax (SDLT) surcharge?
The stamp duty surcharge for second home owners – including landlords – was introduced in April 2016. Initially it was a 3% surcharge on all the standard stamp duty rate. The stamp duty surcharge was upped from 3% to 5% from 31 October 2024.
The stamp duty surcharge means you pay more stamp duty on second homes, or additional homes beyond that, than you would if you only own one property. HMRC calls it the 'Higher Rates on Additional Dwellings' (HRAD).
Who pays buy-to-let stamp duty rates and when?
The buy-to-let surcharge paid by anyone buying an additional residential property worth more than £40,000.
The following buyers will pay the surcharge:
Buy-to-let investors who already own one or more property
Anyone buying a second home or holiday home in addition to their main residence.
The spouse (husband/wife/civil partner) of anyone who already owns a property
Couples where one person already owns a property
Stamp duty payments are due at the time of purchase. The buyer (or their solicitor) must submit the return and pay the tax within 14 days of completion in England and Northern Ireland, or 30 days in Scotland and Wales.
What was the stamp duty holiday ?
From September 2022 to 31 March 2025, home buyers in England and Northern Ireland benefited from a stamp duty holiday. This was introduced by the government to keeping the property market moving following the Covid-19 pandemic. The holiday meant all buyers paid less stamp duty than previously.
But the stamp duty holiday has now come to an end. Stamp duty is now payable on any property worth more than £125,000.
How is stamp duty calculated?
Stamp duty is calculated based on the purchase price of a property using a tiered rate system, where different portions of the property price are taxed at different rates.
This means you only pay each tax rate on the part of the property price that falls within each band – not on the full amount.
How is the stamp duty calculated for a buy-to-let purchase?
Stamp duty on a buy-to-let property is calculated using the standard residential rates plus a 5% surcharge on the entire purchase price.
Here’s how it works in England and Northern Ireland:
The property price is divided into bands.
You apply the standard rate to each band (the “slice system”).
You then add 5% to each band’s rate.
What are the current stamp duty rates for buy-to-let in England and Northern Ireland?
The following table shows current stamp duty rates for buy-to-let landlords in England and Wales.
House Price | Stamp duty rate for landlords |
|---|---|
Up to £125,000 | 5% |
The portion from £125,001 to £250,000 | 7% |
The portion from £250,001 to £925,000 | 10% |
The portion from £925,001 to £1.5 million | 15% |
The portion above £1.5 million | 17% |
📌 Here’s an example:
A landlord with multiple properties buys a house for £400,000. The SDLT owed would be calculated as follows:
5% on the first £125,000 = £6,250
7% on the second £125,000 = £8,750
10% on the final £150,000 = £15,000
total SDLT = £30,000
How much stamp duty do landlords pay?
The following table shows how much stamp duty landlords pay compared to owner-occupiers with just one property.
House price | Standard Rate | Buy-to-let/second home rate |
|---|---|---|
Up to £125,000 | 0% | 5% |
The next £125,000 (the portion from £125,001 to £250,000) | 2% | 7% |
The next £675,000 (the portion from £250,001 to £925,000) | 5% | 10% |
The next £575,000 (the portion from £925,001 to £1.5 million) | 10% | 15% |
The remaining amount (the portion above £1.5 million) | 12% | 17% |
📌 So, an owner-occupier with just one property would pay the following stamp duty on a £400,000 purchase:
0% on the first £125,000 = £0
2% on the second £125,000 = £2,500
5% on the final £150,000 = £7,500
total SDLT = £10,000
You can use the MoneySupermarket stamp duty calculator to find out how much stamp duty you will need to pay as a buy-to-let landlord.
What are the stamp duty regimes in Scotland and Wales?
Stamp duty is a devolved tax in the UK, meaning Scotland and Wales set and collect their own versions instead of using the same rates as England (and Northern Ireland).
In Scotland, it’s called the Land and Buildings Transaction Tax (LBTT), and in Wales, it’s the Land Transaction Tax (LTT). Both are administered by their respective national tax authorities and have different rate bands and surcharges from England and Northern Ireland.
What is the stamp duty regime in Scotland?
Land and Buildings Transaction Tax (LBTT) is the Scottish equivalent of stamp duty.
Buy-to-let or second homes pay the normal LBTT plus an 8% Additional Dwelling Supplement (ADS) on the purchase price. The ADS was previously 6% but it increased to 8% on 5 December 2024. As with stamp duty in England and Wales, a slice system means you pay a different amount of tax on different portions of the purchase price.
This table shows the standard rates and ADS rates in Scotland:
Property price | Standard LBTT rate | Rates including ADS |
|---|---|---|
Up to £145,000 | 0% | 8% |
Portion from £145,001 – £250,000 | 2% | 10% |
Portion from £250,001 – £325,000 | 5% | 13% |
Portion from £325,001 – £750,000 | 10% | 18% |
Portion from over £750,000 | 12% | 20% |
What is the stamp duty regime in Wales?
Land Transaction Tax (LTT) is the Welsh version of stamp duty. It is administered by the Welsh Revenue Authority. It applies to both residential and non-residential property purchases.
Landlords and second home owners in Wales pay a surcharge in the form of higher residential rates.
This table shows the higher residential rates in Wales:
Portion of the property price | Higher LTT rate |
|---|---|
Less than £40,000 | 0% |
£0 - £180,000 | 5% |
£180,001 - £250,000 | 8.5% |
£250,001 - £400,000 | 10% |
£400,001 - £750,000 | 12.5% |
£750,001 - £1.5m | 15% |
£1.5m+ | 17% |
How and when must you pay the stamp duty?
Stamp duty is paid after completion of the property purchase – that’s the date the transaction legally finalises and you get the keys.
You or your conveyancer must submit a return and pay within:
14 days of the completion date in England and Northern Ireland
30 days of the completion date in Scotland and Wales
Solicitors usually handle the payment automatically on your behalf when the purchase completes.
Why do landlords pay more stamp duty?
Landlords pay higher rates of stamp duty due to a policy aimed at discouraging speculative property investment with a buy-to-let mortgage and helping first-time buyers get on the property ladder.
The previous Conservative Government introduced a higher stamp duty surcharge for additional properties, such as investment property and second homes, to address these concerns. The current Labour Government has continued the policy.
The impact of this surcharge is substantial, potentially adding thousands of pounds to a property investor's initial costs. Landlords need to factor in stamp duty charges when working out the profitability of a particular property.
Who pays the stamp duty surcharge?
The additional stamp duty is not limited to landlords and property investors. The surcharge applies to anyone purchasing an additional residential property, such as a second home or holiday home.
If you inherit a property (or part of a property), you will have to pay the stamp duty surcharge if you buy your main home while you still own the inherited property.
Parents intending to buy homes for/with their children also need to consider the stamp duty surcharge if they are already homeowners. If the property is not solely in the child's name, the surcharge will apply.
Where couples buy a property together, if one person already owns a property and purchases a second home with their partner, the surcharge will apply.
Frequently asked questions
Does the stamp duty surcharge apply if I own a property overseas?
Yes – the stamp duty surcharge applies even if the other property you own is outside the UK.
HMRC treats any residential property worldwide as ownership when deciding if the stamp duty surcharge applies. So, if you already own a home abroad and then buy a property in the UK, you’ll usually pay the surcharge because you’re considered to own more than one property.
If my spouse already owns a property, do I have to pay the stamp duty surcharge?
Yes. Married couples and civil partners are treated as a single entity for stamp duty purposes. If one partner already owns a property and the couple purchases another, the higher rate SDLT applies, even if the second property is registered under the non-owner’s name.
This rule aims to prevent couples from splitting ownership to avoid the surcharge.
Cohabiting couples will pay the surcharge if one person owns a property and then they buy one together. But if one person owns a property in their sole name, the other can buy a property registered under their own name without paying the surcharge.
Do limited companies have to pay the stamp duty surcharge?
Some landlords might consider establishing a limited company for their property business in an attempt to avoid the stamp duty surcharge.
However, the rules are clear: both individuals and companies are liable for the additional stamp duty when purchasing residential properties.
Are there any exemptions from the stamp duty surcharge?
Yes. Caravans, mobile homes, houseboats, and residential properties valued under £40,000 are exempt.
How much stamp duty do overseas landlords have to pay?
An extra 2% stamp duty surcharge applies to properties bought by non-UK residents. The surcharge will apply to purchases of both freehold and leasehold property.
Non-UK residents are defined as individuals who have spent fewer than 183 days in the country during the 12 months preceding the purchase. However, if they stay in the UK for at least 183 days following the purchase, they may qualify for a refund of the surcharge.
This surcharge is not exclusive to foreign nationals; it also applies to UK citizens who do not meet the residency requirement. In joint purchases, if at least one buyer is a non-UK resident, the surcharge is triggered.
What are landlord stamp duty rebates?
A legal precedent has established that if a property is deemed uninhabitable at the time of completion, it may not be classified as a dwelling for the purposes of stamp duty.
Landlords who take on a mortgage for a property that is uninhabitable at the time of purchase should seek legal advice, as they may be eligible for a stamp duty refund
Can I get a stamp duty surcharge refund if I sell my other property?
You might be eligible for a stamp duty surcharge refund if you:
Paid the higher rate because you owned another property when you bought your new home, but later sold your previous main residence.
The sale happens within 36 months of buying the new property.
To claim the refund you will need to submit an SDLT refund claim to HMRC (usually through the Gov.uk website.)
You must claim within 12 months of selling your old home or within 12 months of the SDLT filing date – whichever is later.
Refunds typically apply only to main residence replacements, not to buy-to-let investments that remain as additional properties.
Author
Emma Lunn
Personal finance expert
Emma has written about personal finance for almost 20 years, with a career spanning several recessions and their inevitable consequences. Emma’s main focus is helping people learn to manage their...
