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Stamp Duty

stamp duty2

“As the leading independent letting agents in Swindon and the villages, the buy-to-let market is obviously a big and important part of our business at Richard James and we take pride in the great relationships with all of our established landlords. So we want to make sure all our existing and potential clients understand what the new 3% stamp duty surcharge on buy-to-let purchases, which came into effect on April 1st, means for their investment.

Even though we knew it was coming, it still all seemed to happen in a bit of a whirlwind, so here’s the lowdown on the facts and figures to help you make the most of your property portfolio, or to make simple and stress-free business investment decisions in the future – and award-winning expert team are always here to help.

We understand the Chancellor’s thinking behind this – to deter people from buying a home to let, to give families who can’t afford a home to buy more opportunity, especially with housing demand outstripping supply at the moment. So who does it affect?


Apart from houseboats, caravans and homes under £40,000 (the last one is a slightly bizarre exemption as the Treasury says that while these homes are liable for stamp duty, it doesn’t have to be paid – does their generosity know no bounds…), the surcharge of 3% of the total purchase price will apply on purchases of additional residential properties, such as buy to let properties and second homes.

Stamp Duty is applicable in England, Wales & Northern Ireland. (Scotland imposes a Land and Buildings Transactions Tax (LBTT). The Stamp Duty on residential property is calculated on a progressive sliding scale and increases in bands:


Band Old residential
SDLT rates
            New additional
rates for landlords
£0 – £125k               0%                  3%
£125,001 – £250k              2%                  5%
£250,001 – £925k              5%                  8%
£925,001 – £1.5m             10%                  13%
£1.5m +             12%                  15%


Before April 1st if you bought a £200,000 second home or buy to let before April you would have paid Stamp Duty of just £1,500, based on paying 0% on the first £125,000 of the property value and 2% on the portion between £125,001 and £250,000.

But now, you will have to pay 3% for the first £125,000 and 5% (instead of the previous 2%) on the amount between £125,001 and £250,00.

This gives you a total bill of £7,500 – £6,000 more than a month ago (and five times more than a private buyer in this example).

Existing Home Owners

If you buy a second property you will always have to pay the higher rate of Stamp Duty, even if you plan to live in it and rent out your old one.

If you keep your old home at the time of completion you will need to pay the extra stamp duty charges, even if you move into a new main residence.

The only leeway is that you can get a refund of the stamp duty if you sell your old property within 36 months. This aims to help those who may hit delays in the selling process.

Also, if you had more than one property and disposed of your main residence, you would have 36 months’ grace period to buy a new one before the additional stamp duty is charged. This will apply back to 25 November 2015, which is when the proposals were first announced and you’ll need to apply for the refund through HMRC.

And it’s not just landlords who will need to pay more…

Parents buying for children

If you’re a parent and a homeowner and you want to help your children buy their first home, you could now face the higher rate of Stamp Duty if you take out a joint mortgage with your children and your name appears on the deeds – as legally you will now own a second property. But if you simply help with the deposit or act as a guarantor then the higher rates won’t apply.

First Time Buyers

If you decide to purchase a buy-to-let investment as your first property, the new Stamp Duty rate shouldn’t apply as you will only own one property.

Married Couples & Civil Partners

The higher rate of tax will apply if you’re married or in a civil partnership if one person in the relationship already owns a property. The government will treat married couples and civil partners living together as one unit. This means any homes owned by either partner will be included when the Stamp Duty bill comes due on the purchase of another property.

An individual buying a property may be liable for the higher rates if his or her spouse or civil partner has an existing residential property. If the spouse or civil partner then sells that residential property they may be able to claim a refund within 36 months.

The government is also proposing the same system for joint purchasers, so cohabitees may not be at any advantage.

Separated couples 

If you are married, but are living separately permanently but not divorced, you will be exempt from the extra charges, as you will not be treated as one unit when making a purchase and therefore the extra charges will not apply.

Inheriting a share of a property

If you inherit a small share of a property, 50% or less, while in the middle of a purchase of a main residence, the higher rates won’t apply.


If there’s anything further you’d like to know about the new Stamp Duty charges, or about buy-to-let investments in general, please do give us a call and we’d be happy to help you get to grips with it all. We’re here to help, support, guide and to get you on the buy-to-let ladder.”

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