Stamp Duty on Second Home Increased in Budget

For contracts exchanged on residential property purchases after 30^th October 2024, in her budget on that day Chancellor Rachel Reeves raised the Stamp Duty surcharge for additional dwellings beyond a main residential home from 3% to 5%. So, from 31^st October 2024, Stamp Duty for second homes and investment or buy-to-let properties will attract the new higher rate.

The government say the changes, which apply to properties in England and Northern Ireland, are aimed at supporting first-time and main home buyers.

At Lockings Solicitors, our experienced conveyancing solicitors represent individuals, families and property investors in East Yorkshire and beyond. If you are thinking of buying property in addition to your main residence, we would be delighted to help.

We offer a FREE initial chat so that you can ask us any questions you may have about buying a second home or an investment property. Call us on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly. We have offices in Beverley, Hull and York and represent clients across the East Yorkshire and York area.

Who has to pay the Stamp Duty surcharge for second properties?

The higher rate is payable if you are buying an additional property beyond your main residence. The amount payable will be the standard rate of Stamp Duty plus an extra 5%. Unlike basic Stamp Duty on a main residential property, the surcharge of 5% is based on the whole of the purchase price.

The surcharge applies to any additional dwellings in England or Northern Ireland, including holiday homes, buy-to-let and investment properties.

If you sell your main home and tie in a purchase at the same time, you will only need to pay the basic Stamp Duty charge. However, if your sale is delayed and you go ahead with a purchase, you are required to pay the surcharge on your purchase of an extra 5% of the whole purchase price. This is because you will then own two properties.

If you are able to sell the first property within 36 months, you can apply for a refund of the higher rate of Stamp Duty. The application must be sent to HM Revenue & Customs (HMRC) within either one year after the date on which the sale was completed or one year after the Stamp Duty return was filed for the purchase of your new home, whichever is later.

In the event that the sale takes longer than 36 months to complete, you may be able to ask for a refund if the circumstances are exceptional.

How much is Stamp Duty for second home?

Stamp Duty for second homes or other additional dwellings in England and Northern Ireland is the main Stamp Duty charge plus 5% of the whole purchase price.

The current Stamp Duty rates for England and Northern Ireland are:

Rates up to 31 March 2025

Those buying a second property will need to add 5% of the purchase price to the above.

By way of example, if you are buying an investment property for £300,000, you will pay:

Standard Stamp Duty of 5% of the portion of the price between £250,001 and £925,000, which is 5% of £50,000 = £2,500.

Stamp Duty on second home surcharge of 5% of £300,000 = £15,000.

Total Stamp Duty = £17,500.

This is an increase of £6,000 following the budget changes.

Future Stamp Duty changes

After 31^st March 2025, the lower Stamp Duty threshold is due to return to its former level of £125,000, following a temporary increase in September 2022. From 1^st April 2025, tax of 2% will be due on the portion of the price between £125,001 and £250,000.

When is Stamp Duty paid?

A Stamp Duty return must be completed and sent to HMRC with the Stamp Duty payment within 14 days of completion of a purchase. If you ask us to represent you in the conveyancing transaction, we will ensure that we have the Stamp Duty payment from you prior to completion, and as soon as we receive the transfer from the seller’s solicitor, we will send the return and payment to HMRC.

Other surcharges

If you are not a UK resident, you will have to pay a further surcharge of 2%. This is in addition to the second property surcharge. If you were not present in the UK for 183 days out of the year prior to the date of purchase, you will be liable for this non-resident’s surcharge.

How much Land Transaction Tax is paid in Wales for second homes?

The equivalent tax to Stamp Duty for properties in Wales is Land Transaction Tax (LTT). This is set by the Welsh Government and has not currently changed.

For those buying a second home in Wales, a higher LTT rate for additional properties is payable as follows:

Contact our East Yorkshire conveyancing solicitors

If you are thinking of buying a property, including a second home or investment property, call us today and we will be happy to help.

You can ring us for a FREE initial chat on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly. We have offices in Beverley, Hull and York and represent clients across the East Yorkshire and York area.