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When buying a second home, understanding the Stamp Duty Land Tax (SDLT) requirements is essential. The tax rate for second properties is higher than for primary residences, with additional rules and exceptions. Here's what you need to know about stamp duty on second homes in the UK.


Stamp Duty on second homes in England

When you are buying a second home and stamp duty eligibility applies, the amount you pay is dependent on the price paid (and not necessarily the value in the mortgage valuation report) for the property.

Specifically, for buying second properties in England, from 31 October 2024:

Price paid

Stamp duty

Less than £40,000

0%

£40,001-£250,000

5%

£250,001-£925,000

10%

£925,001-£1.5m

15%

Over £1.5m

17%

 

You can try HMRC's Stamp Duty Land Tax Calculator to find out how much you are likely to pay for property that is not your main residence.


Stamp Duty on second homes in Wales

For buying a second home in Wales, the LTT rates are:

Price paid

Stamp duty

Less than £40,000

0%

£40,001-£180,000

4%

£180,001-£250,000

7.5%

£250,001-£400,000

9%

£400,001-£750,000

11.5%

£750,001-£1.5m

14%

Over £1.5m

16%

 

You can use the Welsh Government's Land Transaction Tax calculator to confirm the amount you are likely to pay when you are looking at buying a second home.


Stamp Duty exemptions and how to avoid it on a second home

There are exemptions in place for stamp duty on the purchase of a second home:

  • The property was purchased for a value that's less than £40,000 .
  • The property is a houseboat or a caravan or other mobile dwelling, irrespective of the price tag.
  • The property is being bought as a result of a divorce or separation, although the specifics will need to be verified before making an assumption that you don't need to pay stamp duty.
  • The title deeds are put in the name of someone (e.g. a family member) who has no other home in their name, even if you bought the property.

One other concern that might be voiced is the question of selling a current property while buying a new one. The provisions on stamp duty are clear: you will not have to pay stamp duty on the second home as long as the main residence is sold at the same time as or prior to the second home being bought. 

If you are charged stamp duty for the purchase of the second home before you are able to sell the first property, you may be able to claim that stamp duty payment back from HMRC - for instance delays in the chain creating an overlap.

Because of the issues potentially arising from the purchase of property and whether you are liable for paying stamp duty and how much, it is imperative that you appoint an experienced conveyancing solicitor to handle the legal side of your planned purchase.


How to claim Stamp Duty back on a second home

If you had to pay the stamp duty surcharge due to timing issues (e.g., your primary residence wasn't sold before the second home purchase), you might be eligible for a refund. To claim back stamp duty, you must sell your main residence within 36 months and submit a request to HMRC for a refund on the additional stamp duty.


Common reasons for buying a second home

You might be wondering why anyone would want to buy a second home (or perhaps more than one more), and these are the most often cited reasons:

  • Investment opportunity - it should be noted that, generally, house prices are continuing to rise. In fact, the house price index is one of the economic indicators of strength, so you can be quite certain that buying the “bricks and mortar” investment will pay dividends in the long run because of the likelihood of increasing equity.
  • Tax benefits - even though this is limited, if you are eligible and the circumstances permit it, you may benefit from tax advantages, although you'll need to do your homework to understand what those are, whether you are eligible and how much you are entitled to.
  • Adding to or developing your rental portfolio - buying another home without selling your main property is obviously the point if you are setting yourself up as a landlord, or if you want to expand an existing rental portfolio.
  • Holiday let - you might want to buy a second home in a chosen location to get away from it all as a cheap ongoing holiday - perhaps it's a favourite location from past holidays. In the times that you aren't planning on staying there yourself, you might want to make the property work for you by hiring out the home as a holiday let (although its management costs will need to be factored in).
  • Providing a home for a family member - quite often, the decision to buy a second home is driven by the desire to help a family member with their living arrangements - perhaps it's one of your children, who isn't in a position to afford the deposit or cannot get a mortgage for the size of property, or it might be an aged parent so that they can move nearer to you.
  • A pied-à-terre for work - if you work at a considerable distance from where your main home is and commuting is either too long, stressful or expensive, you might decide to buy a second home to allow you an easily-accessible place to live during the working week.

Importance of a conveyancing solicitor

If you are planning to buy a second home - or adding another property to your rental or investment property - you'll need an experienced conveyancing solicitor, who will work towards as early a completion as possible, while ensuring your interests are met throughout.

The experts at Homeward Legal are well-versed in all aspects of the conveyancing process, providing a quality service at a fee that is great value for money!

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to purchase or sell your next home.

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