Stamp Duty on a Second Property - Let to Buy

DMEL2025

Hello, 

Can you please help me understand how much stamp duty I will pay in the below scenario? 

I currently own a flat worth £160,000 which I live in and next year I am hoping to change it to a Let to Buy mortgage so I can purchase a new home to live in but keep my flat to rent out. 

I am looking to purchase a home for around £280,000 and I will have a 10% deposit (£28k). Can you please confirm how much stamp duty I will pay considering this will be my second property?

Many thanks,

saajan_12

£18k. 
The mortgage and purpose of the properties are (for now) irrelevant. As youre increasing the number of properties, you pay the additional rate stamp duty. £4k for normal SDLT plus £14k for the extra 5% = total £18k

You may be able to claim some of this back if you were to sell the flat within certain timescales, but you're keeping it as a rental, then the above is what will stand. 

Bookworm225

simple maths:
Higher rates of Stamp Duty Land Tax - GOV.UK

Property or lease premium or transfer value	SDLT rate
Up to £125,000	5%
The next £125,000 (the portion from £125,001 to £250,000)	7%
The next £675,000 (the portion from £250,001 to £925,000)	10%

user1977

Or for even simpler maths, use HMRC's calculator: Stamp Duty Land Tax Calculator (assuming you're buying in England or Northern Ireland).

Bookworm225

user1977 said:

Or for even simpler maths, use HMRC's calculator: Stamp Duty Land Tax Calculator (assuming you're buying in England or Northern Ireland).

indeed, but OP needs to see the mechanics of how it calculates so they will understand what they are doing

DMEL2025

Thank you both. HMRC also states the following: 

"Property

• Do not include property (or part of a property) if any of the following apply:

  • the property is worth less than £40,000
  • it’s a mixture of residential and non-residential (like a shop with a flat above it)
  • it’s ‘moveable’ like a caravan, houseboat or mobile home (unless it has become a permanent fixture)

  The rules also do not apply to property you lease if either:

• your lease is for 7 years or less (on the date it was granted)
• the lease is owned by someone else and it has more than 21 years left"

If my property I am letting out is a leasehold which has 195 years left does this make any difference due to the last point?

SDLT_Geek

DMEL2025 said:

Thank you both. HMRC also states the following: 

"Property

• Do not include property (or part of a property) if any of the following apply:

  • the property is worth less than £40,000
  • it’s a mixture of residential and non-residential (like a shop with a flat above it)
  • it’s ‘moveable’ like a caravan, houseboat or mobile home (unless it has become a permanent fixture)

  The rules also do not apply to property you lease if either:

• your lease is for 7 years or less (on the date it was granted)
• the lease is owned by someone else and it has more than 21 years left"

If my property I am letting out is a leasehold which has 195 years left does this make any difference due to the last point?

No, no difference.  Your property is leasehold (rather than being subject to another lease).

user1977

DMEL2025 said:

• The rules also do not apply to property you lease if either:

• your lease is for 7 years or less (on the date it was granted)
• the lease is owned by someone else and it has more than 21 years left"

If my property I am letting out is a leasehold which has 195 years left does this make any difference due to the last point?

No, because you own the lease, not somebody else.

DMEL2025

Ah I see, thanks. 

Annoyingly, if the transaction was switched and I already owned the £280k property, but was purchasing the £160k property, the stamp duty would be significantly less.

Is it relatively easy to add stamp duty onto a mortgage? As it's a large sum, it could impact the feasibility of retaining the current property. 

p00hsticks

DMEL2025 said:

 As it's a large sum, it could impact the feasibility of retaining the current property. 

Which is the whole purpose of the additional tax - to discourage people from keeping one property when buying another ......

Caz3121

DMEL2025 said:

Is it relatively easy to add stamp duty onto a mortgage? As it's a large sum, it could impact the feasibility of retaining the current property. 

You could see if you could get a 95% mortgage then retaining £14k of your deposit towards the SDLT