The relationship between landlord and stamp duty is not always an easy one. Most of the time stamp duty is a confusing process when asking, ‘are landlords exempt from stamp duty?’, most landlords have to keep up to date with the ever-changing stamp duty land tax changes to find out. 

Whether you are a new landlord or have years of experience you might have some questions regarding the process for stamp duty land tax and whether landlords are exempt from stamp duty, so we have put together a guide to help you to stay informed. 

Stamp Duty On Property

Much like council tax, stamp duty land tax is calculated in bands. The higher the price of the property, the more stamp duty you will pay. You have to pay stamp duty regardless of your reason for buying a property. Stamp duty is required on all residential properties, including second houses and buy-to-let properties worth over a specified amount. So, this means that landlords are not exempt from stamp duty payments in the UK.

What’s The Difference Between Residential And Buy-To-Let Stamp Duty?

Stamp duty is due on all property purchases over £40,000 there are distinctions and differences between residential purchases and second homes. It is important to know that properties bought to rent out are classified as second homes under stamp duty land tax regulations. 

As of 2016, all second-home buyers were required to pay an additional 3% in stamp duty when they bought a property. So, anyone buying a home in addition to their main residence or purchasing a buy-to-let property is obligated to pay the additional 3%.

Overseas Landlords And Stamp Duty Land Tax

Landlords who were planning to buy a UK property from overseas used to pay the same SDLT on buy-to-let homes as residential purchases, but as of April 2021 this changed. There is now an additional 2% stamp duty land tax payment on all residential properties for those buying from abroad, including buy-to-let. The 2% is in addition to the 3% if the property is bought for buy-to-let purposes and so international landlords may be looking at a 5% surcharge on stamp duty land tax. However, this again means that landlords are not exempt from stamp duty payments even if they are purchasing from overseas.

Landlord Stamp Duty Land Tax Exemptions

There are landlord exemptions from stamp duty on certain properties, but these cases are rare occurrences for most landlords. 

Charitable trusts and registered social landlords are exempt from stamp duty land tax on buy-to-let properties at the additional 3%, but still have to pay the regular rate of stamp duty on their property purchase.

If a property is bought for less than £125,000 you will not pay additional surcharges as a landlord, if the purchase sits between £125,001 and £250,000 you will pay a 2% surcharge. Houses under £40,000 are exempt from stamp duty land tax on second-purchase homes.

Stamp Duty on Main Residence For Landlords

Landlords who are replacing their primary residence aren’t liable to pay the additional 3% stamp duty surcharge on the purchase, despite owning additional properties elsewhere. Proof that the residence is the primary address or main residence will be required to claim back or be made exempt from paying stamp duty on the main residence for landlords. Proof can include or be obtained from an electoral roll document or registration note from your local doctor.

Stamp Duty Refund For Landlords

For landlords, a stamp duty refund can only be claimed if they meet specific eligibility criteria. This usually involves buying a property that isn’t immediately habitable when the sale is completed and doesn’t yet fall under the definition of a ‘dwelling.’ This would require taking a second mortgage out on a property that has officially been declared “uninhabitable.” This would make landlords eligible for a stamp duty refund on any SDLT that they have already paid. 

Other conditions of a stamp duty refund for landlords include claiming a refund on the 3% stamp duty surcharge if you meet the following criteria:

If you are a landlord seeking more information on whether landlords are exempt from stamp duty or if you want to know if you would be eligible for a stamp duty refund for landlords, get in touch with our CapEx Tax specialists who will be able to walk you through the process and advise you accordingly.