Let to buy stamp duty

What is stamp duty land tax?

Stamp Duty land tax is payable when you buy a house, flat, land buildings in the UK. There are minimum thresholds in place and then payable rates.

The amount you pay will depend on whether the land or property is going to be your residential property.


When purchasing a buy to let property or another property to live in you will have to pay stamp duty. In this blog we discuss some scenarios for stamp duty to give you an indication of the stamp duty that may be payable when buying a property.


The stamp duty surcharge for buy to let properties

2015 the government announced an additional 3% stamp duty payable for anyone purchasing a 2nd home. This was bought in to help the housing crisis as the government felt that the booming buy to let market was preventing people from purchasing a home. They felt the additional stamp duty rate would reduce the number of people purchasing 2nd homes. The additional 3% was to be used to fund the building of more affordable homes


What stamp duty is payable on a buy to let property?

For buy to let properties there is stamp duty payable if the purchase price is over £40,000. The 3% surcharge is then levied if buying the property will result in you owning more than 1 property.


What stamp duty is payable when doing a let to buy?

A let to buy is where you let your current property out and buy a new property to live in. You can take out a buy to let mortgage for your current property if the affordability and equity allows. Some people will also look at taking equity out of their current property to use for the deposit or moving costs on the new property. You would then take a new residential mortgage on the property you will be living in.


For a let to buy as you will be keeping your current residential property and buying a new residential property you pay a higher rate of stamp duty. We will come on to this in a little more detail below.


Are there any scenarios where you don’t pay stamp duty?

Yes there is no stamp duty payable if a property is worth less than £40,000.

Caravans, mobile homes and houseboats are also all excluded from the additional stamp duty rate.

There are also some exemptions from the higher rate of stamp duty. If you are purchasing a Buy to Let property which will be your first and only property you would pay normal rates. Also, there is a multiple dwellings relief; when purchasing multiple smaller properties as part of one transaction.

Buy to let Stamp Duty rates in the UK

Up to £250,000 0% 3%
£250,001 to £925,000 5% 8%
£925,001 to £1.5 million 10% 13%
Over £1.5 million 12% 15%


Buy to let Stamp Duty rates in Scotland

Up to £145,000 0% 4%
£145,001 to £250,000 2% 6%
£250,001 to £325,000 5% 9%
£325,000 to £750,000 10% 14%
Over £750,000 12% 16%


Stamp Duty rates in Wales

Up to £180,000 0% 4%
£180,001 up to £250,000 3.5% 7.5%
£250,001 to £400,000 5% 9%
£400,001 to £750,000 7.5% 11.5%
£750,001 to £1.5m 10% 14%
Over £1.5m 12% 16%


How and when is the stamp duty payable

Your solicitor or conveyancer will usually factor the stamp duty in to your quote and provide you with a bill for the stamp duty payable including the additional stamp duty rate. Stamp duty is payable within 30 days of your completion date.


What if my partner owns a property?

This is a commonly asked question as some people look to put their residential property in 1 persons name to benefit from the first time buyer stamp duty relief or avoid the surcharge for a buy to let. Married couples and civil partners are classed as a single unit for the purposes of stamp duty land tax. So regardless of who is named on the properties, If you will own more than 1 property as a couple on completion of the transaction you will pay a higher stamp duty


What if I inherit a property?

If you inherit a property you do not have to pay stamp duty land tax. You would need to consider inheritance tax on an inherited property. The other consideration would be what you will do with the property once you have inherited it. If there will be any change of ownership such as adding or removing someone from the property deeds that you have inherited


What is classed as my main residence?

The property where you and your family spend most of your time is classed as your main residence for the purposes for stamp duty land tax. Things such as where you work, where any children you have go to school and where you are registered to vote are taken in to account.


*Willow Brook mortgages are a mortgage brokerage and not tax advisors. We would advise speaking to your solicitor to get an exact quote for the stamp duty payable in your exact scenario.*