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A Landlord Guide to The New Stamp Duty Rules
Despite fears over property prices in the wake of the UK’s recent Brexit, property prices remain high and some cities such as Liverpool and Bristol are even outstripping London for their rate of growth. This continues to make it very difficult for first time buyers to get on the housing ladder. Much of this has been blamed on the explosion in the buy-to-let property market, which is something the new stamp duty rates that came into effect this April hope to address.

In this article we’re going to take a look at the new stamp duty rates and look at the impact on existing and future property portfolios of landlords.
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What are the New Stamp Duty Rises?

As of 1st April 2016 anyone purchasing an additional property will be liable to an increased rate of stamp duty of 3%. The changes are an attempt by the Government to curb the buy-to-let property market, whose growth is seen as pushing up property prices and making it a lot harder for first time buyers to get on the property ladder. The tax duty rises will be followed by reductions in mortgage interest relief in 2017, something that is also likely to hit landlords.

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The new rates will apply to all properties, including holiday homes, off-plan purchases and buildings in the process of being converted into a dwelling. Commercial properties won’t be affected however.

New Stamp Duty Tax Rates

Stamp duty currently falls into bands based on the value of your existing residential property. Up to £125k of this is zero rate but increases to 2% charged on property value between £125k - £250k. If you were to buy a second property this initial zero rate band would be set at 3%, with anything between £125k - £250k incurring 5% in stamp duty.

Below is a table of all banding for both existing residential rates and additional properties.


Existing Residential Rate

Additional Property Rates

£0 - £125k



£125k - £250k



£250k - £925k



£925k - £1.5m



£1.5m +



Bear in mind these rates are charged on tiered basis so you are only paying it on value that falls above the previous band but below the next band. So for example if you purchased an additional property worth £500k you would pay 3% on the first £125k, 5% on the property value between £125k and £250k and 8% on the remaining property value above £250k.

This has been worked out below and compared to the stamp duty rates on a single property.

Existing Residential Rate

0% on the first £125,000  =  £0

3% on the next £125,000 to £250,000  =  £3750

5% on the final £250,000 =  £12,500

= £16,250


Additional Property Rates

3% on the first £125,000  =  £3,750

5% on the next £125,000 to £250,000  =  £6250

8% on the final £250,000 =  £20,000

= £30,000

Who is affected by the new Stamp Duty rates?

Although the new stamp duty rises were designed specifically to hit buy to let landlords, they cover anyone buying a second home. So if you have one property and are replacing it then the new stamp duty rates won’t apply. If you have more than one property then the rates will apply to all additional properties bought, unless you are replacing your main residence.

If you are buying a new main residence and you have not yet sold your previous main residence then the new rates will apply but you will be eligible for a refund for up to 36 months after purchase.

Caravans, mobile homes and houseboats are exempt from the rules, as are properties worth less than £40,000. Social landlords and registered charities will also be exempt from the new stamp duty rates.

Separated married couples who have not yet divorced will also be exempt from the rules and not treated as one unit when purchasing a property.

Finally, if you inherit 50% or less of a property 36 months prior to the transaction date of a property purchase, you will not be liable to the new rules either, as this will not be considered an additional property.

 Don't miss this exclusive Upad webinar on Brexit and its impact on the PRS sector and Buy-To-Let landlords, Tuesday 02/8.
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Are there ways to reduce the Stamp Duty surcharge?

There are very few opportunities for relief on the new stamp duty rates. As mentioned main residencies sold within 36 months after the purchase of a new main residency, will be liable for a refund of new stamp duty. This means ‘flipping’ your main residence to your new property won’t help you avoid the new rates as you will still have to sell the first property to get a refund.

There are some instances where the new stamp duty rates can be avoided. These include purchasing more than one property, in which case the average property price will be used; something that can significantly reduce the final stamp duty bill. Purchases of mixed use properties (ie shops and flats) may also incur lower rates.

Click here to calculate your mortgage interest relief

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