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Buy To Let Landlords – Stamp Duty Tax to increase by 3% in April 2016


Well yet another blow to buy to let property investors after the Chancellors Autumn budget announcement that from April 2016, those in England and Wales will have to pay a 3% surcharge on each stamp duty band.

For properties purchases between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%.

Based on an average nationwide buy-to-let purchase of £184,000, Landlords will pay an extra £5,520 from April 2016.

The Government will be consulting on whether commercial property investors and funds with more than 15 properties will be exempt from the new charges. Although this is likely, confirmation still needs to be received. Corporate investors such as housing associations will be exempt.

Stamp Duty Rates (on purchases)

Property value Standard rate Buy-to-let/second home rate (April 2016)

Up to £125,000                      0%                                                        3%

£125 – £250,000                  2%                                                          5%

£250 – £925,000                 5%                                                       8%

£925-£1.5m                               10%                                                     13%

over £1.5m                                     12%                                                     15%

Source: HMRC

The UK property market is such a good investment that most UK Landlords will just factor in the additional costs and continue to make good returns.

There will probably be some panic buying between now and April 2016, but after that life will return to normal.

For those looking at increasing the size of their buy to let portfolio take care not to be rushed into purchases without ensuring that the property the type and in an area of demand, and also that the rental return will be sufficient to meet your needs.

Please speak to Valissa Burnett for free advice on any buy to let purchases.

For Corporate bodies and Overseas Property Investors

SDLT is charged at 15% on residential properties costing more than £500,000 bought by certain corporate bodies (or 'non-natural persons'). These include:

  • companies
  • partnerships including companies
  • collective investment schemes

If the properties are not to be rented out, they may also need to pay Annual Tax on Enveloped Dwellings.

The 15% rate doesn't apply to property bought by trustees of a settlement or bought by a UK resident company to be used for:

  • a property rental business
  • property developers and trader
  • property occupied by employees

The standard residential rate of applies in these cases.

Non resident companies will also have 20% Capital Gains Tax to pay when they sell the investment properties.

Those letting agents like us at Regency Lettings & Property Management Limited, who assist their clients with property investments will have a lot more work and number crunching to do when we advise our clients.


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