Second Homes: What Should You Pay in Stamp Duty?
When you already own a property and want to buy another, you may need to pay a higher rate of Stamp Duty, known as a surcharge. There are some exceptions and you may be entitled to a refund if you paid too much.
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What is the Stamp Duty for second homes?
When you buy a second property, the Stamp Duty you pay is higher than if you're selling your only home and buying another. You pay an extra 3% on the standard Stamp Duty rates when buying a second home compared to when you’re moving house. You pay less if you’re eligible for relief.
What should you pay in SLDT for your second home?
- How Much Stamp Duty You Need to Pay On Properties*
- Up to £250,000
- On the proportion from £250,001 to £925,000
- On the proportion from £925,001 to £1.5 million
- On any amount over £1.5 million
- *Special rates apply if you qualify for any other relief.
- Buying One Property to Live In
- 0%
- 5%
- 10%
- 12%
- Buying a Second Home
-
UK resident: 3%
Non-UK resident: 5% -
UK resident: 8%
Non-UK resident: 10% -
UK resident: 13%
Non-UK resident: 15% -
UK resident: 15%
Non-UK resident: 17%
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Paying Stamp Duty on second homes
When buying a second home (so you own more than one property), you pay 3% more compared to when you’re buying your only home. You pay less if you’re eligible for reliefs or exemptions, like if the second home you’re buying is replacing your main residence.
There are two types of non-UK residents: a non-UK resident individual and a non-UK resident company.
For individuals, this means you are not present in the UK for 183 days or more in the 12 months before you buy the property.
For example, if you live abroad for more than 6 months before buying a property, you are considered a non-UK resident for Stamp Duty purposes.
For companies, this means your company is not a UK resident for Corporation Tax purchases on the date you buy the property.
When you are married or in a civil partnership, you are considered “one unit” for Stamp Duty purposes. Therefore, what applies to your partner applies to you.
For example, if you both own a house together and your partner wants to buy a second home, the higher rates will apply to their purchase.
Or if you’re married and your partner owns a property, you’ll need to pay the higher rates if you want to buy a property yourself, even though only one of you currently owns a property.
Anyone who has owned a property before is not considered a first-time buyer when purchasing a property.
Even if you didn’t buy the home and instead inherited it, and therefore have never bought a property before, you are still not considered a first-time buyer for Stamp Duty purposes.
Therefore, if you buy a second home, the higher rates of Stamp Duty will apply.
Are you owed thousands in Stamp Duty?
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Examples of second home tax relief
01
Example 1:
A couple own a property and want to buy a second home to rent it out.
Because they already own a property and are buying a second as individuals (not a company) they must pay the higher rates.
For a £300,000 second home, the Stamp Duty will be £11,500 compared to £2,500 if it was their only property and no other reliefs or exemptions apply.
02
Example 2:
A person wants to buy a second home as a company or trust.
Because the company or trust already owns a property, the higher rates of Stamp Duty apply to any freehold purchase over £40,000.
For a £300,000 second home, the Stamp Duty required to pay will be £11,500.
For a £40,000 freehold second home, no Stamp Duty will need to be paid.
03
Example 3:
A person owns two properties; one is rented to a tenant and the second is their main residence.
They sell their main residence and purchase a new one to live in. Even though they own two properties, they have replaced their main residence and therefore will not pay the higher SLDT rates.
For a £300,000 second home, the Stamp Duty will be £2,500.
04
Example 4:
A person spends 8 months of the year living abroad and the rest in the UK.
They are therefore classed as a non-UK resident for Stamp Duty purposes. To buy a second property in England or Northern Ireland in addition to the one they already own in the UK, they must pay the 3% surcharge plus an extra 2% surcharge for being a non-UK resident.
For a £300,000 second home, the Stamp Duty will be £17,500.
Are you owed thousands in Stamp Duty?
Am I eligible to pay the higher Stamp Duty Rate?
- Own a home and are not selling it when buying this second home?
- Are married or in a civil partnership and your partner owns a home, and you want to buy a second home together?
- Have inherited a home and want to keep it and buy your first home?
- Are selling your home while buying another property, but have not sold your other property by the time you buy your second home*?
Frequently asked questions about second homes Stamp Duty
When buying another property in addition to the one you already own, you have to pay an extra 3% in Stamp Duty. Because Stamp Duty rates are 5% for purchases over £250,000 and under £925,001, you have to pay 8% when you buy this property.
You can avoid paying the higher rates of Stamp Duty on a second home if you or the property you’re buying is eligible for certain reliefs.
For example, you can avoid Stamp Duty if:
- The property you’re buying is under £40,000 and you’re a company or trust
- The property is uninhabitable at the time of purchase
- The property is a non-residential or mixed use property
The additional 3% SDLT applies when you are buying a second home. This does not mean moving house (selling your current home to buy another). It means buying a property in addition to the one you already own. The additional 3% is added to the rate you’d pay if you were moving home, not buying a second.
For example, on a house costing £400,000, you pay 5% plus 3% in SDLT, a total of 8% and an amount of £19,500.
Stamp duty is higher for second homes because you own more than one property. HMRC doesn’t provide a reason for why they charge more Stamp Duty for second home purchases. However, it’s widely considered to be because properties are a valuable asset that people can make money from, either by renting or flipping. Therefore, buying a second home is considered somewhat commercial and a higher tax applies.
You can get a refund if you paid a higher rate of Stamp Duty on your second home, provided you meet certain criteria. The most common reason to get a Stamp Duty refund on a second home if is you sell your other property within 3 years of buying the second home.
You can also get a refund if:
- Special circumstances stopped you from selling your previous residence before buying another
- The property was uninhabitable at the time of purchase
- You were wrongfully charged the higher rate because you were buying a second home to replace your main residence
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Paul EdwardsI reached out to StampDuty.com in August to discuss a purchase I made last year.
The property was in a bad state of repair, lots needed doing. When StampDuty.com gathered the documents and images of the property, they let me know I could save roughly £40,000. This seemed amazing but i was sceptical, why didn't my lawyer point this out. After many reassuring conversations and pointing to legislation to explain their answers, we pushed ahead.
I am pleased to say I received my refund at the end of October! I just want to thank Joe and the team for all of their hard work and the fast turnaround.