Buy-to-let stamp duty

What are the changes to buy-to-let stamp duty?

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Stamp duty on buy-to-let properties changed in April of 2016. How have the changes affected current and potential buy-to-let landlords?

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During George Osborne’s time as chancellor, he took landlords by surprise when he proposed a stamp duty surcharge of three percentage points back in 2015’s autumn statement.

At that time, the buy-to-let market was already reeling from the chancellor’s announcement in the July 2015 Summer Budget to cut mortgage interest tax relief, which threatened to make a serious dent in landlords’ profits.

The reason the government introduced both measures was an attempt to slow the relentless rise in house prices. Many commentators blame buy-to-let landlords in particular for pushing up property values and squeezing first-time buyers out of the market.

The changes to mortgage tax relief came into force in April 2017. The stamp duty hike came into effect on April 1, 2016, and applies to property purchases in England, Wales and Northern Ireland.

"Caravans, mobile homes and house boats are not currently liable for stamp duty."

Rates of stamp duty

Since April 2016, landlords pay an extra three percentage points of stamp duty on each band, when they purchase a buy-to-let property.

The surcharge can potentially add thousands of pounds to the stamp-duty bill.

House price

Standard Rate

Buy-to-let/second home rate

Up to £125,000



£125,001 - £250,000



£250,001 - £925,000



£925,001 - £1.5m



Over £1.5m



The rates for landlords (and anyone buying a second home) is 3% on the portion of the property up to £125,000, then 5%, 8%, 13% and 15% respectively for the price tiers.

The changes in stamp duty are a major concern for current and potential buy-to-let landlords according to Home Let, with 28.9% citing it as a concern within the next 12 months. A significant 31.4% of landlords are also worrying about potential further changes to legislation.

Surcharge liability

The surcharge applies to anyone who is buying an additional property.

You will also have to pay the higher rate of stamp duty if the property you are buying replaces your main residence, but the main residence has not yet been sold.

In this instance though, you can apply for a refund provided the previous main residence is sold within 36 months.

These changes don’t just affect landlords. For example, they could ensnare a parent who is buying a home for a child, unless the property is bought solely in the name of the offspring.

Couples could also be caught out. If a couple owns a property in one partner’s name and buys another in the name of the other partner, the higher rates would apply.

The surcharge even extends to homes abroad. If you already own a home in Spain and buy an additional property in England, you will have to pay the higher rate of stamp duty.

Corporate responsibility

Landlords cannot sidestep the new charge by setting up a limited company as it applies to companies as well as individuals.

Companies are subject to the higher rates when they buy any residential property over £40,000 and are not subject to a lease of more than 21 years.

Exempt properties

Some properties are also exempt from the surcharge – but it’s a limited number. Caravans, mobile homes and house boats are not currently liable for stamp duty.

The government is also excluding all properties worth less than £40,000. Residential properties worth less than £40,000 do not count when determining if an additional property is being bought.

If you’re thinking of purchasing a buy-to-let property, you can compare mortgages here.

Overseas stamp duty 

The UK government are considering introducing a 1% stamp duty surcharge on properties purchased by non-UK residents. This is due to ‘some evidence’ that house prices are being inflated by buyers from overseas.

A non-UK resident is someone who has spent under 183 days in the UK over the previous 12 months. However if that person spends a minimum of 183 days in the UK in the year after purchasing the house, they can apply for a refund.

The surcharge applies to non-UK residents, which can still include UK citizens – even if you have a British passport, you’ll still have to pay the surcharge if you don’t meet the 183 day requirement.

If you’re carrying out a joint purchase and at least one of you is a non-UK resident, the surcharge will also still apply.

Landlord stamp duty rebates

Fresh precedent was set after a recent legal case, in which it was held that if a second property isn't immediately habitable upon completion - i.e. when the keys are handed to the new owners - it doesn't constitute a dwelling for the purposes of the Finance Act 2003.

This means that if you take a second mortgage out on a property that has been declared uninhabitable, you may be eligible for a refund on stamp duty you already paid. If this applies to you, it might be worth seeking legal advice before taking any next steps. 

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