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Buying a house that is rented out, Do I have to pay the extra 3% stamp duty?

johnonymous
johnonymous Posts: 14 Forumite
10 Posts
in House buying, renting & selling
I am hoping to buy a House in Plymouth but most of the properties I like are already rented out to students, If I bought an already rented hoise would the 3% stamp surchare apply? This would be my only property and my place of residence after the rental contract expired.
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Comments

  • AdrianC
    AdrianC Posts: 42,189 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper
    No, the +3% is nothing to do with renting...

    It's simply the hike if you buy an additional property.
    Since this is your only property - no +3%.
  • steampowered
    steampowered Posts: 6,176 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 15 February 2021 at 3:13PM
    No stamp duty on this property as it would be your only property.

    However:
    - If you were to buy a second property while still owning this property, that would be a second property so would be subject to higher rate SDLT. Even if you were buying that second property as your main residence. 

    - If you are using a residential mortgage, you will need to have vacant possession. So you would need the tenants to have left before your exchange contract. If you want to complete the purchase while tenants are still present you will need a BTL mortgage.
  • johnonymous
    johnonymous Posts: 14 Forumite
    10 Posts
    Many thanks for the quick response! I had read in a Which article online that the surcharge applied to additional properties or buy to let properties and had been worried that by purchasing a property that would have to be let out for a period before I could occupy it that technically it would be a buy to let property.
  • tripled
    tripled Posts: 2,886 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 15 February 2021 at 3:14PM
    johnonymous said:
    I am hoping to buy a House in Plymouth but most of the properties I like are already rented out to students, If I bought an already rented hoise would the 3% stamp surchare apply? This would be my only property and my place of residence after the rental contract expired.
    Some things to bear in mind. You would probably need a Buy To Let mortgage if there are tenants in situ. Also, assuming it is an normal assured shorthold tenancy, a "rental contract" does not expire, just comes to the end of the fixed term, at which point you can formally ask the tenants to leave. If they do not, you can then start eviction proceedings. In the mean time you would need to be familiar with and comply with your obligations as a landlord, or you could get stung.
  • greatcrested
    greatcrested Posts: 5,925 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 15 February 2021 at 3:16PM
    The first property you buy is subject to standard SDLT.
    The additional 3% 2nd property SDLT does not apply
    If there are tenants in the property:
    1) if you are getting a residential mortgage for your own occupation, you'll need to wait till the tenants leave and the tenancy ends before you can purchase
    2) if you purchase with the tenants still in occupation, with cash or with a BTL mortgage, you'll become a landlord, and need to comply with 126 rules, laws and procedures. It may take a year or more to evict them.


  • AlwaysWorking
    AlwaysWorking Posts: 611 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    I'm sure you know this but you will need to get a BTL mortgage and become a landlord (and all that that entails) until the tenants leave.
    johnonymous said:
    This would be my only property and my place of residence after the rental contract expired.

    "I believe that everything happens for a reason. People change so that you can learn to let go, things go wrong so that you appreciate them when they're right, you believe lies so you eventually learn to trust no one but yourself, and sometimes good things fall apart so better things can fall together." Marilyn Monroe
  • GDB2222
    GDB2222 Posts: 26,851 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 15 February 2021 at 3:23PM
    Bear in mind that it’s incredibly difficult to evict tenants who don’t want to leave. A small defect in the letting process by the current landlord might make the tenants completely unevictable. Ever!

    A better idea would be to agree informally with the current owner that you will buy the property as soon as it becomes vacant. That’s usually in the summer with uni students. Only exchange contracts once the property has been vacated, and verify that personally. Make it the landlord’s problem to get vacant possession, not yours. 
    No reliance should be placed on the above! Absolutely none, do you hear?
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper
    I very much doubt the OP will be buying with tenants in situ.
  • GDB2222
    GDB2222 Posts: 26,851 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    AdrianC said:
    I very much doubt the OP will be buying with tenants in situ.
    Well then there’s clearly no issue over stamp duty. Or BTL mortgage etc. Problem solved. :)
    No reliance should be placed on the above! Absolutely none, do you hear?
  • johnonymous
    johnonymous Posts: 14 Forumite
    10 Posts
    Sorry for not being clearer. I was actually thinking of buying with tenants in situ despite it not being my preferance. My favourite properties are currently all being let out to students. Based on 4 months to complete I was thinking that having a rental income for two months before moving in would not be a huge deal unless this triggered a stamp duty surcharge. I had not considered the possibilty of problems taking possesion; thanks for the heads up on that.
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