Stamp duty explained Buy-to-let stamp duty

Buy-to-let stamp duty calculator

Enter the price of a buy-to-let property or second home to find out how much stamp duty you'll have to pay on it.

Property price (£):

 

Use our buy-to-let stamp duty calculator to find out how much stamp duty you'll pay on a buy-to-let property or second home, and find out more about the new rates and who they apply to below.

The new buy-to-let stamp duty rules mean that anyone buying an additional property, including buy-to-let landlords and those buying second homes and holiday homes, will have to pay an extra 3% in stamp duty.

  • Need a mortgage? Which? Mortgage Advisers can search the entire market for the best buy-to-let deal for your personal circumstances. Call 0808 252 7987 for a free consultation.
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Stamp duty for buy-to-let investors and second homeowners

The new second home and buy-to-let stamp duty rates are tiered, just like residential stamp duty rates and income tax. Each tier, or portion of the property price, is now subject to an extra 3% stamp duty on top of the usual rate paid by those buying a home they are intending to live in.

You can check out the old and new stamp duty rates in the table below, and calculate how much you'll now have to pay using our buy-to-let stamp duty calculator, top right.

Buy-to-let stamp duty rates
Portion of property priceOld stamp duty rateNew stamp duty rate (as of 1 April 2016)
£0-£40,000a0%0%
£0-£125,000b0%3%
£125,001-£250,0002%5%
£250,001-£925,0005%8%
£925,001-£1.5m10%13%
£1.5m+12%15%
Table notes: Rates also apply to second homes and holiday homes. aIf total property price is £40,000 or less. bIf total property price is over £40,000. 

Take a look at this example to see how it works:

  • Property price: £275,000
  • Portion 1: £0 - £125,000 - 3% tax (£3,750)  
  • Portion 2: £125,000.01 - £250,000 - 5% tax (£6,250)
  • Portion 3: £250,000.01 - £275,000 - 8% tax (£2,000)
  • Total paid: £287,000 (£12,000 tax)

Buy-to-let stamp duty: who is exempt?

If you're married or in a civil partnership and either partner already owns a property, you'll have to pay the additional stamp duty regardless of how many properties you yourself own.

If the purchase is not made by an individual (eg the buyer is a company rather than a person), the additional stamp duty will apply regardless of how many properties the company owns. 

Caravan

Caravans, houseboats and mobile homes are exempt from additional stamp duty

So what properties are excluded from buy-to-let stamp duty? 

If the total price paid for the property is under £40,000 you won't need to pay any stamp duty at all.

If you're buying a caravan, mobile home or houseboat, you'll also be exempt from stamp duty, regardless of the purchase price and whether it's going to be your main residence. 

If you exchanged contracts on or before 26 November 2015, and then complete your purchase on or after 1 April 2016, you will be exempt from paying the higher rate of stamp duty.

Moving house

If you buy a new home before selling your old one, you will have to pay the higher stamp duty rate. However, you can claim this back if you sell your original home within 36 months (three years) of buying the new one. The claim must be made within three months of the sale.

Holding financial interest in a property

It's unlikely that additional stamp duty will apply if you have inherited a small share (50% or less) in an additional property, or you hold a financial interest in one as part of a partnership or as a beneficiary of a trust.

However, there are exceptions, so you should declare any financial interests such as these to your solicitor.  

Buy-to-let stamp duty: frequently asked questions

When exactly do I have to pay stamp duty?˅

Stamp duty must be paid within 30 days of buying a property. In most cases, you’ll transfer the money to your conveyancer, who will make the payment on the day you complete your purchase.

If I buy a new home before selling my current one, will I have to pay the extra stamp duty charge?˅

Initially, yes, but you can claim this back if you sell your original property within 36 months.

What counts as a ‘main residence’ for stamp duty purposes?˅

Your ‘main residence’ is the place that you and your family spend most of your time living in. To determine your main residence, HMRC will look at factors including where you work, where your children go to school and where you’re registered to vote.

I’m unmarried but live with my partner in a house that they solely own. I now want to buy a property in my own name. Will I have to pay the extra stamp duty charge? ˅

As long as you’re not married or in a civil partnership, you can buy a property solely in your own name without paying the surcharge.

My husband/wife owns the property that we live in together. If I buy a property solely in my name, will I have to pay the extra stamp duty charge?˅

Yes. Married couples are considered as one person for stamp duty purposes.

I’m buying a house in the UK, but already own a home abroad. Will I have to pay the extra stamp duty charge?˅

It depends. If you already own a property in the UK as your main residence and are simply moving house (ie, selling your current property and buying a new one), you won't have to pay the additional charge. If, however, you own a property overseas and are buying your first UK home, you'll have to pay the surcharge as it will be counted as a second home.

I own a property in the UK and want to buy a holiday home abroad. Will I have to pay the extra stamp duty charge?˅

Stamp duty only applies to properties in the UK, so you won’t have to pay it when buying a home abroad.

I’m helping my child buy a property and already own my own home. Will I need to pay the additional charge?˅

It depends. If you’re gifting your child money for a deposit or acting as a guarantor on their mortgage, you won’t need to pay. If your name is going on the mortgage as a joint owner, you’ll technically own two properties so will need to pay the surcharge.

What happens if I inherit a property? ˅

Stamp duty isn’t payable on inherited properties, but if you inherit a home and then buy another one before selling it, you'll usually need to pay the stamp duty surcharge on the property you're buying. If, however, you inherit a share of 50% or less of a property and buy your next home more than 36 months later, it won’t be considered an extra property.

What if I want to buy a home that has a ‘granny flat’ or annex?˅

As long as the annex is bought in the same transaction as the main residence, is within the grounds of the main home and is worth no more than a third of the overall value, you won’t have to pay the extra charge.

I’ve split up with my partner but my name is still on the deeds. Will I need to pay the extra stamp duty when I buy a new house? ˅

Initially, yes. When you buy the new property you’ll have to pay the 3% surcharge, but you can claim this back if you sell your stake in the old property within 36 months.

 

Buy-to-let mortgages typically come with bigger fees and higher rates

Investing in a buy-to-let property

Investing in property has been very popular in the last few years. Recently, however, the buy-to-let sector has been coming under intense scrutiny, with the Bank of England monitoring closely for signs of the market overheating.

Buy-to-let can be profitable, but it's not always straightforward. Not only will you need to become an expert on the local property market and get a suitable mortgage, you'll also need to be prepared for the various responsibilities you'll face.

If you're buying a property with the intention of letting it out, unless you're buying it outright you'll need a buy-to-let mortgage. The best rates are typically on offer to buyers with deposits of at least 25%, but it is possible to unlock decent deals with a 15% deposit. Mortgage rates and fees tend to be a little higher than on residential mortgages, too. 

The criteria can also be strict, with lenders looking closely at how much rent you're likely to bring in compared to your mortgage repayments.

Once you've bought the property, you need to consider the additional costs of letting a home, including landlord insurance, maintenance costs, agent fees and void periods.

  • Finding a buy-to-let mortgage can be a confusing process, but you can get impartial advice on the right product for you by contacting Which? Mortgage Advisers on 0808 252 7987 

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Last updated:

July 2016

Updated by:

Joe Elvin

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