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Stamp Duty on Buy-to-Let Properties

Nicola Ryan

Written by

26th May 2023 (Last updated on 11th Apr 2024) 5 minute read

If you purchase a buy-to-let property in the UK, you must pay Stamp Duty.

For tax purposes, UK residents are required to pay an additional surcharge on the new purchase regardless of the cost. There may be extra charges for non-UK residents. The amount owed is dependent on the property value.

Whether you are a new landlord or have previously owned buy-to-let properties, it’s important to instruct a solicitor. They will guide you through the conveyancing process and offer expert advice.

In this guide, we’ve gathered everything you need to know about paying Stamp Duty on buy-to-let properties.

  1. Do You Pay Stamp Duty on a Buy-to-Let?
  2. Stamp Duty Rates for Buy-to-Let Properties
  3. Example of an Average Buy-to-Let Stamp Duty Payment
  4. Why is There a Higher Rate?
  5. What are the Exemptions?
  6. How Do I Pay Stamp Duty on a Buy-to-Let?
  7. Do I Need a Solicitor to Buy a Buy-to-Let?

Do You Pay Stamp Duty on a Buy-to-Let?

Stamp Duty Land Tax (SDLT) must be paid on all freehold and leasehold buy-to-let residential properties as they are investment properties. We go in depth into the the cost of buying a freehold as there are many steps and costs involved with buying the freehold.

The extra surcharge also includes those purchasing holiday homes to let.

This includes those purchasing the property through a shared ownership scheme. However, those making a joint purchase will only pay the SDLT surcharge on the portion they are buying rather than the full purchase price. Limited companies purchasing residential properties to let will have to pay an annual tax. This is known as Enveloped Dwellings.

If you are married or in a civil partnership and either partner already owns a property, you will still have to pay the additional SDLT. If you are not married or in a civil partnership, you will not have to pay any additional Stamp Duty if your name is not on the original property's mortgage and property deeds.

The additional Stamp Duty you pay depends on the property price. It also differs from regular Stamp Duty rates and is paid in portions. Therefore, the more expensive a property is, the higher the total amount will be as the rates increase.

Stamp Duty Rates for Buy-to-Let Properties

The Stamp Duty for second home rates differs across the UK. Scotland and Wales set their own land payment regulations, while England and Northern Ireland have the same structure. In all cases, the Stamp Duty bands increase with the value of the property. Your solicitor is able to offer you tax advice if you are unsure how much you will owe.

Here are the various Stamp Duty, LTT, and LBTT rates across the UK:

SDLT Rates in England and Northern Ireland

House PriceStamp Duty RateHigher Rates for Additional Properties
Up to £250,0000%3%
£250,001 to £925,0005%8%
£925,001 to £1.5 million10%13%
£1.5 million+12%15%

Land Transaction Tax Rates in Wales

House PriceLand Transaction Tax RateAdditional Property Rate
Up to £225,000
£225,000 - £400,000
£4000 to £750,000
£750,001 to £1.5 million
£1.5 million+

Read more on Stamp Duty in Wales: The Land Transaction Tax Explained

Land and Buildings Transaction Tax Rates in Scotland

House PriceLBTT Rate
LBTT Additional Property Rate
Up to £145,000
£145,001 to £250,000
£250,001 to £325,000
£325,001 to £750,000

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Example of an Average Buy-to-Let Stamp Duty Payment

If you purchase a property valued at £400,000, you will pay 3% Stamp Duty on the first £250,000 and then 8% on the remaining £150,000.

This means that:

3% of £250,000 = £7,500

8% of £150,000 = £12,000

Total SDLT owed = £19,500

Stamp Duty Calculator

How much Stamp Duty you will have to pay depends on the transfer value of the buy-to-let property. The Stamp Duty rates are higher on buy-to-let properties and are paid in a different format. Different portions of the property value will have different rates, increasing the property's cost.

Use our Stamp Duty Calculator to find out how much you owe

Why is There a Higher Rate?

Over the years, the increasing number of landlords buying rental properties contributed to the UK housing crisis. Therefore, the Government introduced a Stamp Duty holiday in July 2020. This increased the thresholds in order to boost the housing market.

The holiday allowed prospective buyers to get on the property ladder and buy a home, adhering to the new rates of Stamp Duty. The aim was to encourage buyers looking to purchase their first property.

There were extensions to the Stamp Duty holiday, including the one announced in the 2021 Spring Budget until it finally ended in July 2021. The standard rates were then brought back.

On the 23rd September 2022, the Government announced that higher Stamp Duty rates would apply to additional property purchases. This includes buy-to-let property purchases. With a minimum 3% extra Stamp Duty rate, it’s essential to consider this before proceeding with the purchase.

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What are the Exemptions?

There are exemptions and reliefs available in certain situations. It’s best to consult with your buy-to-let solicitor if you are unsure whether you qualify for an exemption or relief.

Exemptions include:

  • Caravans
  • Houseboats
  • Mobile homes
  • Properties valued at £40,000 or under

There are some instances where you may receive a discounted Stamp Duty rate. First-time buyers investing in buy-to-let properties will only have to pay the standard rates. However, this is only the case if it is the only property they will own. It can be difficult for first-time buyers to locate mortgage lenders. This is because the majority of buy-to-let purchasers have made home purchases before.

Those purchasing multiple properties in one transaction may apply for multiple dwellings relief. The minimum Stamp Duty rate for multiple dwellings relief is 1% of the total amount paid.

How Do I Pay Stamp Duty on a Buy-to-Let?

Your solicitor will pay Stamp Duty on your behalf within 30 days of completion. The money must be transferred to your solicitor beforehand. If the Stamp Duty is not paid following this period, you will be liable to legal action and won’t be registered with the Land Registry.

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Do I Need a Solicitor to Buy a Buy-to-Let?

Buy-to-let properties are classed as investment properties. This means you will need a solicitor to guide you through the conveyancing process. The conveyancing process involves additional steps. This includes submitting the Commercial Property Standard Enquiries (CPSE) form.

Your solicitor will offer you advice throughout and ensure you are ready to take on your responsibilities as a landlord.

Compare My Move can connect you with up to 6 regulated solicitors in your area who can assist with your buy-to-let property purchase. Fill out our conveyancing comparison form and you can compare quotes and save money on your conveyancing fees.

All our partners must pass a strict verification process. This includes being regulated by one of the following:

  • Solicitors Regulation Authority (SRA)
  • Council for Licensed Conveyancers (CLC)
  • Law Society of Scotland (LSS)
  • Law Society of Northern Ireland (LSNI)
  • Chartered Institute of Legal Executives (CILEX)

Once they have been accepted on our network, our partners are monitored by our partner support team to ensure that they follow our code of conduct.

Nicola Ryan

Written by Nicola Ryan

Nicola focusses on all things moving house at Compare My Move where she writes articles for the advice centre, guiding users through everything they need to know about moving house.

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