From April 2016, the government put in place a stamp duty surcharge of 3% on any second home. This applies to any additional house you purchase other than the one you live in. This also includes any second property under the £125,000 threshold that were previously exempt from stamp duty on second home purchases. Because of this, lower price houses were popular for investors as buy to let properties. The additional stamp duty charges were introduced to help first time buyers get easier access to the affordable housing market.
If you’re looking to buy a second home, whether this is to use yourself, or as a buy to let or holiday let then you should make sure you’re aware of the additional stamp duty charges you could face.
What is stamp duty?
Stamp duty land tax (SDLT) is a lump-sum tax that anyone buying land or a property has to pay. In Scotland, they have a slightly different policy known as Land and Buildings Transaction Tax.
How much stamp duty will I pay?
The amount of stamp duty you will need to pay depends on the purchase price of the property you’re buying. The higher the cost of the property, the more stamp duty you will need to pay. However, you will only pay the proportion of the purchase price that is above the threshold.
The extra 3% stamp duty is applied to all house prices on top of the banding structure already in place.
Purchase price | Rate on first property | Rate on additional properties |
Up to £125,000 | 0% | 3% |
£125,000.01 – £250,000 | 2% | 5% |
£250,000.01 – £925,000 | 5% | 8% |
£925,000.01 – £1,500,000 | 10% | 13% |
£1,500,000.01+ | 12% | 15% |
The Money Saving Experts stamp duty calculator can help you to work out how much you will need to pay in stamp duty.
Moving house
If you’re moving house then you won’t have to pay the higher rates, but you will need to sell your main home on the same day as you buy your new home. If you sell your main home later on then you will need to pay the higher rate as you will essentially own two homes. You can claim a refund if you sell your old home within 3 years of buying your new home.