Stamp Duty for Property Investors

Stamp Duty for Property Investors

Recent Changes to Stamp Duty

Recent changes introduced by the government apply to stamp duty for property investors and buy to let landlords as well as others wanting to purchase a second home. The changes apply to all second homes including buy to let and holiday homes and lets. If the property is £39,999.99 or less not stamp duty applies. The duty is applied per applicant so if you co-own property with another investor, as long as your share is below £40,000 no stamp duty surcharge will apply in which case you can jointly buy a property just below £80,000 without paying stamp duty.

Stamp Duty Surcharges England, Wales & Northern Ireland

  • Property price under £40,000 stamp duty 0%
  • Property price £40,000–£125,000 stamp duty 3%
  • Property price £125,001–£250,000 usual duty 2% plus an additional 3% = 5%
  • Property price £250,001–£925,000 usual duty 5% plus an additional 3% = 8%
  • Property price £925,001–£1.5m usual duty 10% plus an additional 3% = 13%
  • Property price over £1.5m usual duty 12% plus an additional 3% = 15

In Scotland stamp duty is called Land and Buildings Transaction Tax (LBTT) and the rates are as follows:

 

  • Property price under £40,000 stamp duty 0%
  • Property price £40,001–£145,000 stamp duty 3%
  • Property price £145,001–£250,000 usual duty 2% plus an additional 3% = 5%
  • Property price £250,001–£325,000 usual duty 5% plus an additional 3% = 8%
  • Property price £325,001–£750,000 usual duty 10% plus an additional 3% = 13%
  • Property price over £750,001 usual duty 12% plus an additional 3% = 15%

What Does this mean for the buy to let investor?

The changes to stamp duty for property investors has caused many to stop buying in the short-term but investors are starting to factor these costs of buying in and re-entering the property investment market. There was an initial influx of purchases just prior to the changes coming in to save the extra expense and this caused an initial slow down in the market for a while afterwards. This is likely to correct itself over time with no great effect on landlords. Stamp duty is a capital expense and can be claimed back on sale of the property in the future.

For more property investment information you can purchase my book: Buy to let: 7 steps to successful investment.