A buy-to-let property, in short, is when a property is purchased for the sole purpose that it will be rented out. Buy-to-let properties are purchased by both individuals and private companies in the UK. 

The majority of those purchasing buy-to-lets in the UK are not first-time buyers, so therefore, will be purchasing properties classed as ‘second properties’ according to HMRCs rules around stamp duty. Consequently, these buyers will be subject to higher stamp duty rates. 

However, those that have purchased a buy-to-let property may be exempt from paying higher stamp duty rates or may be entitled to a stamp duty refund. This guide explores all the current relevant exemptions and loopholes for buy-to-let stamp duty rates. 

 

What Is Buy-to-Let Stamp Duty? 

First-time buyers that purchase any property (even buy-to-lets) are exempt from paying any stamp duty on homes worth under £425,000. Though buy-to-let properties can be bought by first-time buyers, often mortgage lenders will not accept such buyers. 

However, buy-to-let properties are most commonly bought by those that already own other properties. Thus, these are commonly considered ‘second properties’ under HMRCs rules surrounding stamp duty for buy-to-let properties. Any property is considered a ‘second property’ if the homebuyer already owns their own home. 

So, what are the stamp duty rates for second properties? Find a comprehensive table below of the current rates in the UK (specifically England and Northern Ireland). Scotland and Wales also have additional stamp duty rates for buy-to-let properties (if a second property). 

Property Value Standard Rate Additional Buy-to-Let Stamp Duty Rate 
£0 – £250,000  0% 3% (on properties worth £40,000+)
£250,001 – £925,000  5% 8%
£925,001 – £1,500,000  10% 13%
£1,500,001+ 12% 15%

Therefore, the usual stamp duty standard rates apply with an additional 3% surcharge.

To briefly explain, this means if you purchase a buy-to-let property and already own another property you’ll be required to pay an additional stamp duty rate. 

 

Are There Any Exemptions for Buy-to-Let Stamp Duty?

Stamp duty can be extremely expensive, especially for those buying additional properties. However, there are some exemptions which may help individuals save thousands of pounds. 

For instance, all second properties purchased worth under £40,000 are exempt from stamp duty. Likewise, those purchasing mobile homes, boats or caravans will not be required to pay any stamp duty (despite these technically being used as additional residential areas). 

Those that have bought a buy-to-let property and it is their second home, yet are selling their main residence, may also be entitled to a stamp duty rebate. This is applicable if you sell your main property within 18 months of buying your buy-to-let. 

In addition, those that are struggling to sell their main residences may also be exempt due to COVID-19 restrictions or public authority actions. Similarly, those that purchased buy-to-lets which may be classed as uninhabitable at the time of purchase could also be eligible for a stamp duty refund. 

 

Other Rules to Consider for Buy-to-Lets

There are also a few other exemptions people should be aware of when it comes to buy-to-let properties. 

  • First-Time Buyers Purchasing Buy-to-Lets: Firstly, if you’re a first-time buyer and purchasing a property to be rented out then you will no longer be eligible for first-time buyer stamp duty rates. This means you’ll have to pay the usual additional rates for second properties.
  • Married Couples: If your spouse owns a property, then you will be subject to a buy-to-let stamp duty rate even if you don’t own your own home. However, if you’ve been separated for a considerable amount of time different rules apply. This is because the purchase of a property in such a circumstance will be considered purchasing a main residence. 
  • Unmarried Couples: If you and your partner aren’t married, but one of you already owns a property, then to avoid additional stamp duty rates for second homes you will have to only name one of you on the property deeds and mortgage. 
  • Residences Abroad: Even if your main residence is abroad, you’ll still be required to pay the additional stamp duty rates for a buy-to-let in the UK. However, if you wish to buy a property abroad then the additional stamp duty rates do not apply in such cases. 
  • Inherited Properties: If you inherit a property it won’t be considered a second property as long as you own less than 50% of it. If you do wish to buy a buy-to-let property and have inherited a property and have more than 50% in share of it, you will have to wait 3 years before additional stamp duty rates won’t apply to you. 

 

How to Claim Back Stamp Duty on a Buy-to-Let

You can get in touch with HMRC yourself to discover whether or not you’re eligible for a stamp duty refund on a buy-to-let property. However, using a Stamp Duty Rebate expert company will likely make the process easier and quicker for you. Knowledgeable in all exemptions and rules surrounding stamp duty, a company specialising in stamp duty refunds may find a loophole not made explicitly clear to buy-to-let property buyers.