As well as your obligations towards tenants, there are some financial costs that you might not expect when buying properties to rent out, like stamp duty.
We discuss stamp duty for buy-to-let properties, what it means for you as a landlord, and other responsibilities to consider.
What is stamp duty?
Stamp duty land tax (SDLT) is a tax that home buyers must pay when buying a house above a certain price in England and Northern Ireland.
It’s slightly different in Scotland and Wales.
Who pays stamp duty?
There are different levels of stamp duty, depending on the price of the property you buy and whether it’s the first property you’ve bought.
If you’re a landlord, it’s likely this is your second or even third property, so you probably won’t be entitled to the first-time buyer discount.
Also, it likely won’t be your only property or your primary residence, so you’ll need to pay an additional rate of 5% in stamp duty.
There’s going to be some changes to stamp duty starting from the 1st of April 2025.
How much is stamp duty for landlords?
If you’re a landlord looking to buy a new property, the amount of stamp duty you need to pay will change depending on a few things.
If you’re buying a buy-to-let property, you’ll need to pay a minimum 5% extra charge. This is on top of any regular stamp duty fees.
Your regular stamp duty fees are decided by how much the property is worth.
We’ve broken this all down below.
Before the 1st of April 2025:
Currently, you’ll need to pay:
- 5% stamp duty on any properties worth up to £250,000
- 10% on any properties worth between £250,001 and £925,000
- 15% on any properties worth between £925,001 and £1.5 million
- 17% on any properties worth above £1.5 million
After the 1st of April 2025:
Once the new stamp duty rules come into force on the 1st of April, you’ll need to pay:
- 5% stamp duty on any properties worth up to £125,000
- 7% on any properties worth between £125,001 and £250,000
- 10% on any properties worth between £250,001 and £925,000
- 15% on any properties worth between £925,001 and £1.5 million
- 17% on any properties worth above £1.5 million
The above is based on the rules in England and Northern Ireland – the rules are different in Wales and Scotland.
How is stamp duty paid?
Stamp duty land tax is a personal tax so it’s your responsibility to make sure you pay it. However, normally your solicitor will act on your behalf to organise it.
You have 14 days after your completion date to submit a Stamp Duty Land Tax (SDLT) return and pay any SDLT that you owe.
If you don’t pay the tax within 14 days, HM Revenue and Customs (HMRC) can charge you a penalty.
What is stamp duty relief?
Stamp duty relief is the discount that buyers can benefit from when buying their first home, meaning they pay less or no tax.
Stamp duty relief can also be claimed in a few other scenarios, including:
- charities buying for charitable reasons
- local authorities making a compulsory purchase
- right-to-buy properties
See the government website for full details on stamp duty relief and exceptions.
Are there other exemptions to stamp duty?
According to GOV.uk, you don't pay stamp duty if:
- the property is left to you in a will
- the property is transferred due to divorce or end of a civil partnership
- no money or payment is exchanged for a land or property transfer
- for caravans, mobile homes and houseboats
Do I pay stamp duty in Scotland?
Home buyers in Scotland pay Land and Buildings Transaction Tax (LBTT) instead, which replaced stamp duty in 2015.
It applies to properties that cost more than £145,00, or more than £175,000 if you’re a first-time buyer.
Find out more about Land and Buildings Transaction Tax.
Do I pay stamp duty in Wales?
Stamp duty in Wales was replaced by the Land Transaction Tax (LTT) in 2018.
In Wales, first-time buyers don’t have relief, so everyone buying a property in Wales pays the same stamp duty. It only depends on how much the property costs.
Find out more about Land Transaction Tax.
Landlord insurance
Whether you’re buying your second or fifth property to rent out, it’s worth having landlord insurance in place to protect yourself.
