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Buy to Let / Second Homes – Stamp Duty Explained

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From the 1st April 2016, Stamp Duty rates for buy-to-let and second homes increased.

If the property you are purchasing is a second home or you will be renting out, you will be charged a higher rate of Stamp Duty. For further clarification please visit the Government’s Stamp Duty Guidance note on gov.uk

The higher rates sit 3% above the current rates of Stamp Duty that apply to standard residential purchases. These new costs are worked out slightly differently and each rate will apply to the portion of the consideration that falls within each band.

Stamp Duty Rates for Buy to Let / Second Properties from 1st April 2016

Purchase price of propertyRate paid on portion of price within each band
Up to £125,0003%
Over £125,000 and up to £250,0005%
Over £250,000 and up to £925,0008%
Over £925,000 and up to £1,500,00013%
Over £1,500,00015%

Examples — How to work out the new higher rates of Stamp Duty

The Stamp Duty due on a purchase of buy to let/second home for £300,000 that is liable to the higher rates would be £14,000. This will be calculated as follows:

Charge
3% on the first £125,000£3,750
5% on the next £125,000£6,250
8% on the final £50,0008%
Total stamp duty due£14,000

Please note that every scenario is different. An example of where the higher rates may be applicable would be a Remortgage with a Transfer of Equity (Residential or Buy-to-let) where the chargeable consideration is £40,000 or over.

There are also circumstances where the higher rates are not applicable, for example, a First-time buyer will not have to pay the higher stamp duty rates when their first property is a buy-to-let property.

For further information or help with a calculation, please see the Government’s Stamp Duty Land Tax pages.

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