Stamp Duty on Buy to Let Property: The Facts

Do You Pay Stamp Duty on Buy to Let? 

Yes, those investing in buy to let property are required to pay a stamp duty tax fee.  

Buy to let properties are classed as a second property, meaning stamp duty rates apply.  

How Much Stamp Duty Is Payable on Buy to Let Purchases? 

If you already own a home that you live in, and you’re buying a second property that you intend to rent out for income rather than living in it, you’ll pay more stamp duty land tax than someone buying their first home.  

The rates in our stamp duty tax table below show how much buy to let stamp duty tax buyers are expected to pay in the UK from 1st October 2021 onwards. 

Here’s an example of the amount of stamp duty tax that would be payable on a buy to let purchase in the UK. 

The property price: £250,000 

The stamp duty land tax rate: 5%  

The total amount paid in SDLT: £12,500 

What If I’m a First-Time Buyer Who’s Investing in Buy to Let? 

If you’re a first-time buyer choosing to invest in buy to let property as their first property purchase, you won’t pay the same rate of stamp duty tax as a typical buy to let investor. 

Most buy to let investors will already own their main residence but will buy a second property to rent out and make money. 

If you don’t already own a home of your own, you’ll pay stamp duty tax at a reduced rate compared to buy to let investors who already own property. 

As a first-time buyer investing in buy to let, you’ll pay zero stamp duty tax on any property worth £125,000 or less.  

I’m Confused About Stamp Duty Tax – Will I Need to Pay the Surcharge? 

Stamp duty land tax is one of the added costs that come with buy to let property which all property investors should know about.  

But if you’re just starting out and buying your first buy to let property, it can be confusing to know if you’re required to pay higher stamp duty rates than the typical buyer. 

Here is a handy mindmap to help you understand whether you need to pay the stamp duty surcharge on buy to let property.

I’m an Overseas Buyer – Do I Pay the Same Stamp Duty Tax on Buy to Let Property?

If you’re an overseas buyer, you’ll need to pay an extra surcharge of 2% on any purchases.  

This rule came into effect in April 2021 and means that the added overall cost of stamp duty tax on buy to let property is even greater for overseas buyers.  

If, for example, you’re an overseas buyer who’s purchasing a buy to let property worth £125,000, you would pay a total of £6,200 in stamp duty land tax.  

This is because you’ll pay £3,750 – the typical buy to let stamp duty tax on a property of this value – and an additional overseas investor surcharge of £2,500.  

Who Is Exempt From Paying Buy to Let Stamp Duty Tax?  

Some people are exempt from paying stamp duty tax on buy to let property purchases.  

Check this list to see if you could avoid the cost of stamp duty on a buy to let second home.

• Those buying property worth £40,000 or less.  
• Those buying a caravan, houseboat, or mobile home. 
• Being a first-time buyer who doesn’t own their own property (non-buy to let stamp duty rates will apply) 

What Are the Rules For Buy to Let Stamp Duty Tax For Couples? 

If you’re in a couple, either married or unmarried, you might be wondering whether the buy to let rules for stamp duty on buy to let property apply to you depending on how many properties each person owns.  

For instance, some couples wonder whether a buy to let surcharge for stamp duty land tax would apply for them if only one person within the couple owns a property already. 

Unfortunately for married couples or those in a civil partnership, the buy to let surcharge tax price would apply in this circumstance.  

This is because married couples or those in a civil partnership are treated as one person when it comes to stamp duty tax. 

For those who are still married but not living together, this rule doesn’t apply.  

Couples who are unmarried can also avoid these higher rates if the person in the couple who doesn’t already own a property buys property as an individual, as they’ll still be classed as a first-time buyer.