The amount of Stamp Duty you pay on a second home depends on the value of your new property.
In that regard, it’s similar to buying your first property. But, according to rules set out by the government last spring, if you’re buying a second or additional property, you’ll pay an extra 3% on top of the standard Stamp Duty thresholds.
Although a 3% increase may seem small, in reality this can add hundreds or even thousands of pounds on to your already expensive property-buying budget.
Why do I have to pay Stamp Duty?
Stamp Duty is a tax that’s charged when you buy commercial or residential property or land. For residential property, the rate you’re charged is directly related to the total value of the property you’re purchasing.
See the table below for a breakdown of the new percentage rates now chargeable on second or additional homes:
Standard Stamp Duty Rate
Second Home Rate
£0 - £125,000
£125,001 - £250,000
£250,000 - £925,000
£925,0001 - £1.5 million
How does the 3% increase affect me?
If you already own a property and you want to buy an additional one, you’ll have to pay Stamp Duty at 3% above the typical threshold. This is only if you’re buying another property without selling your current home first (or if you haven’t managed to sell your current home at the time you complete the purchase of your new one).
This includes properties under £125,000. Even though you do not need to pay Stamp Duty on a property worth less than £125,000 if it is the only property you own, for a second property Stamp Duty is now payable if it’s valued below £125,000.
If you own a share of a property, either through a shared ownership scheme or privately between friends or family, and the value of your share comes to more than £40,000, you will need to pay the increased Stamp Duty rate if you wish to buy an additional property.
For those who dream of a life on the French Riviera or retiring to the Costa del Sol while still maintaining a UK base, the higher Stamp Duty rate will affect you too. If you own a property in the UK and are looking to find a holiday home in a sunny climate, you need to take into consideration that the increased Stamp Duty will still affect you even though you are buying a property outside the UK.
It is still a second property and so is still affected by the new Stamp Duty rates.
Disclaimer: All information and links are correct at the time of publishing.