New Stamp duty for Buy to Let – what’s the cost?

March 9, 2016

With the additional 3% stamp duty tax coming into effect shortly for Buy to Let properties, there has been a flurry of property sales being processed prior to the 1st April 2016 deadline.

The Government’s rationale for introducing the additional stamp duty charge is to increase the number of opportunities for first time buyers and families to purchase property. If landlords have to pay more to buy property,  the argument is that purchasing a  property will become less attractive as an investment and thus creating more opportunities for first time buyers.

The stamp duty change will affect almost all investors

The taxation will be applied to all property  sold over £40,000 when it is being purchased by someone who already owns a property.

The calculations work in the same way as income tax. For example, if you purchased a second property worth £350,000, you would pay 3% tax (£3,750) on the first £125,000, 2% (£6,250) on the next £125,000 and 3% (£8,000) on the remaining £100,000. The total Stamp Duty due is £18,000 – an effective rate of 5.1%.

If the buyer or investor owns a property abroad their UK purchase will still be considered a ‘second property’ purchase and therefore will be eligible for the increase in stamp duty. The additional rate only applies for properties bought in the UK.

The below flowchart helps to understand the various scenarios where the additional stamp duty tax will potentially impact:

 The above is not a fully exhaustive list of scenarios and we therefore recommend that you seek independent financial advice if you are considering purchasing.

Northwood have extensive range of investment properties available for sale throughout the UK.


Calculate the cost of the new Stamp Duty rates

We have created a simple to use Stamp Duty Calculator specifically for Buy-to-Let property purchases that exchange after the 1st  April 2016. Click here to see your stamp duty liability for your Buy-to-Let investment.


Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.

Find us on Twitter @northwoodUK or visit our YouTube Channel.

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