Stamp Duty on Buy-to-Let Properties UK 2025
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Buy-to-let properties attract an additional 5% SDLT surcharge (increased from 3% in October 2024) on top of standard rates. A £300,000 buy-to-let purchase costs £17,500 in stamp duty compared to £2,500 for a main residence.
Understanding stamp duty on buy-to-let is essential before purchasing an investment property. The costs are significantly higher than for a main residence, and the rules changed in October 2024.
How much stamp duty on buy-to-let?
Buy-to-let stamp duty is calculated by adding 5% to each standard SDLT band. On a £300,000 property, you'll pay £17,500 for a buy-to-let compared to just £2,500 for your main residence.
The higher rate applies because buy-to-let purchases count as "additional properties" - you already own (or will own) your main residence, so the investment property is a second home for SDLT purposes.
The additional property surcharge (5% from Oct 2024)
Since 31 October 2024, the additional property surcharge increased from 3% to 5%. This applies to all buy-to-let purchases, second homes, and additional residential properties.
The surcharge was introduced in 2016 at 3% to cool the buy-to-let market. The increase to 5% in the October 2024 Budget further increases the upfront cost of property investment. Combined with Section 24 mortgage interest restrictions, this makes careful financial planning essential for landlords.
SDLT rates table for buy-to-let
Buy-to-let rates are 5% higher across all bands. Here's the comparison:
| Property Value | Main Residence Rate | Buy-to-Let Rate |
|---|---|---|
| £0 - £250,000 | 0% | 5% |
| £250,001 - £925,000 | 5% | 10% |
| £925,001 - £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
Note: These rates apply from 1 April 2025. Between 31 October 2024 and 31 March 2025, the 0% threshold for main residences was £250,000 temporarily raised to £250,000 (no change for additional properties).
Example calculations at different price points
Here's what you'd actually pay on common property prices:
| Purchase Price | Main Residence SDLT | Buy-to-Let SDLT | Extra Cost |
|---|---|---|---|
| £150,000 | £0 | £7,500 | £7,500 |
| £200,000 | £0 | £10,000 | £10,000 |
| £250,000 | £0 | £12,500 | £12,500 |
| £300,000 | £2,500 | £17,500 | £15,000 |
| £400,000 | £7,500 | £27,500 | £20,000 |
| £500,000 | £12,500 | £37,500 | £25,000 |
The £300,000 calculation: £250,000 x 5% = £12,500, plus £50,000 x 10% = £5,000. Total = £17,500.
When does the surcharge apply?
The 5% surcharge applies when you'll own two or more residential properties after completion, with some exceptions.
You pay the surcharge if:
- You're buying a second property while keeping your main residence
- You're buying any additional investment property
- You're buying as a company (always pays higher rates)
- You own property abroad (worldwide ownership counts)
Properties owned by your spouse or civil partner count toward the two-property threshold. However, properties owned by other family members (parents, siblings, children) do not count.
Exemptions and reliefs
Several exemptions can reduce or eliminate the surcharge in specific circumstances.
Replacement of main residence
If you're buying a new main home and selling your old one, you don't pay the surcharge. You have 3 years to sell your previous home and can claim a refund if you paid the surcharge initially.
Properties under £40,000
Purchases under £40,000 are exempt from SDLT entirely, including the surcharge. This is rare but can apply to some very low-value properties.
Inherited properties
If you inherited a share of a property (not the whole property), and your share is worth less than £40,000, it may not count toward the two-property threshold.
Multiple dwellings relief (abolished)
Note: Multiple Dwellings Relief was abolished on 1 June 2024 and is no longer available for new purchases.
Companies buying property
Limited companies always pay the 5% surcharge when buying residential property, regardless of whether it's their first property.
For properties over £500,000, companies may also be liable for the 15% rate under the Annual Tax on Enveloped Dwellings (ATED) regime, though letting properties are usually exempt from ATED itself.
Despite the higher upfront costs, some landlords still prefer company ownership for Section 24 relief - companies can fully deduct mortgage interest, unlike individual landlords.
First-time buyers buying to let
First-time buyers who purchase a buy-to-let as their first property do NOT get first-time buyer relief - they pay the full additional property rates.
First-time buyer relief (0% up to £425,000 on properties up to £625,000) only applies to properties you'll live in as your main residence. If you're buying to let out, you're treated as purchasing an additional property from day one.
This is a common misconception - being a first-time buyer doesn't help with buy-to-let purchases at all.
Frequently asked questions
Do I pay the surcharge if I sell my main home first?
If you sell your main residence before completing on a buy-to-let purchase, you would not own two properties at completion and the surcharge would not apply. However, if you still own your main home at completion, the surcharge applies even if you plan to sell it afterwards. Timing is crucial.
What about replacing a main residence?
If you're buying a new main residence and selling your old one, the surcharge doesn't apply - this is the "replacement of main residence" relief. You have 3 years to sell your previous main home and can claim a refund if you paid the surcharge initially.
Is there relief for properties under £40,000?
Yes, purchases under £40,000 are exempt from SDLT entirely, including the additional property surcharge. This can apply to very low-value properties, though such properties are rare in most of the UK.
Managing this yourself?
LandlordOS helps UK landlords stay compliant and organised:
- Automatic compliance reminders for Gas Safety, EICR, EPC
- Document storage with AI-powered certificate reading
- Tenancy tracking and rent management
LandlordOS tip
Factor stamp duty into your yield calculations from day one. On a £300,000 property, the £17,500 stamp duty represents nearly 6% of the purchase price - it takes years of rental income to recover this cost. Also consider Capital Gains Tax on rental property when planning your exit strategy.