New stamp duty rates take force on second homes purchases

1 April 2016

From today (1 April 2016), new stamp duty land tax (SDLT) rates for second homes will come into force, affecting those purchasing buy-to-let properties, holiday homes or helping a family member to buy their first home.

The additional stamp duty for those buying a second home will be 3% higher than the rate charged for those buying their main residential property. 


This means that the following charges will apply on additional residential properties:

  • 3%, instead of 0%, on properties up to £125,000.
  • 5%, instead of 2%, on properties from £125,001 to £250,000.
  • 8%, instead of 5%, on properties from £250,001 to  £925,000.
  • 13%, instead of 10%, on properties from £925,001 to £1.5 million.
  • 15%, instead of 12%, on properties costing more than £1.5 million.


So if, for example, you buy an additional residential property for £200,000, stamp duty will be calculated as follows:

3% on the first £125,000 = £3,750
5% on the remaining £75,000 (the portion between £125,001 and £200,000) = £3,750
The total stamp duty due is therefore: £3,750 + £3,750 = £7,500.

The government will charge the extra stamp duty for those who have a temporary time lapse between buying a new main residence before selling their previous main residence – for example, due to employment or family circumstances.

But you’ll be refunded the stamp duty if you sell your previous main resident within 18 months of the purchase of your new main residence.

Parents who are helping their children to get on to the property ladder will be charged the additional stamp duty if they jointly own the property with their children. However, if they give their child money towards a deposit or act as a guarantor on their mortgage, but won’t jointly own the property, they will not have to pay the higher rates.


‘Buy-to-let changes could push rents up’

Commenting on the impact of the stamp duty hike on tenants, Christian Faes, co-founder and chief executive of peer-to-peer mortgage lender LendInvest, says: ”The stamp duty hike spells bad news for landlords – and their tenants.

“Put simply: when taxes rise, someone has to pay. Our latest Buy-to-let Index shows that the likely payer is ultimately going to be the tenant, with higher rents. The stamp duty hike will cause yields to fall for landlords, putting pressure on them to raise the rents they charge.”

“It’s not just in Inner London, where landlords’ taxes will soar, that we can expect to see landlords and tenants squeezed financially. The Index shows that all across England and Wales, many landlords will be factoring several thousands of pounds of stamp duty tax into their budgets for the first time.”


Add new comment