Stamp duty holiday for landlords

Most landlords could have been forgiven for assuming Chancellor Rishi Sunak’s much-publicised stamp duty holiday wouldn’t apply to them.

After all, landlords have been forced to pay the additional 3% stamp duty surcharge on their buy-to-let properties since 2016, on top of other regulatory changes to mortgage interest tax relief that have also hit their bottom line.

But although that 3% surcharge still applies, Mr Sunak confirmed that the raising of the stamp duty threshold to £500,000 earlier in July would also apply to landlords and buyers of second homes in England and Northern Ireland – some good news for investors at last!

So, if you’re looking to expand your buy-to-let portfolio and make some considerable savings, now is the time to do it

Landlord stamp duty: The new rules

Prior to the announcement of the stamp duty ‘holiday’ for buyers in England and Northern Ireland, landlords paid the same rate of stamp duty as regular home buyers, with that 3% surcharge levied on top for buy-to-let properties or second homes.

So, a buy-to-let property costing £300,000 would have set you back £14,000 in stamp duty prior to July 8, when the stamp duty holiday came into effect.

That breakdown would have looked like this:

• First £125,000 of purchase price – 3% in stamp duty (0% plus 3% surcharge): £3,750
• £125,001 - £250,000 – 5% in stamp duty (2% plus 3% surcharge): £6,250
• £250,001 - £300,000 – 8% in stamp duty (5% plus 3% surcharge): £4,000
Total: £14,000

Now, though, that same £300,000 buy-to-let property will cost you £9,000:

• First £300,000 of purchase price – 3% in stamp duty (0% plus 3% surcharge): £9,000
Total: £9,000

A buy-to-let property costing £500,000, meanwhile, will now mean a £15,000 stamp duty bill rather than £30,000 – a huge saving of 50%.

Landlord stamp duty rates

Rates of stamp duty for landlords are now as follows, until March 31, 2021 when the Chancellor’s stamp duty ‘holiday’ comes to an end.

• First £500,000 of purchase price – 3% stamp duty (0% plus 3% surcharge)
• £500,001 to £925,000 – 8% stamp duty (5% plus 3% surcharge)
• £925,001 to £1.5million – 13% stamp duty (10% plus 3% surcharge)
• Amount above £1.5million – 15% stamp duty (12% plus 3% surcharge)

Can you claim back stamp duty from HMRC?

Many buyers who completed property purchases in the days and weeks leading up to the stamp duty holiday start date of July 8 have asked if they can claim back what they paid.

The answer is, unfortunately, ‘no’.

The Chancellor’s stamp duty holiday was put in place to try to stimulate the property market rather than reward those people who were already purchasing.

That means landlords in the same situation will also be unable to claim back any stamp duty paid on completed purchases before July 8.

However, if you exchanged contracts on a purchase prior to July 8, but are yet to complete, the new stamp duty rates will apply to you as long as you complete before March 31, 2021.

Buy-to-let mortgages during the stamp duty holiday

Unsurprisingly, the number of buy-to-let mortgage products on offer during the coronavirus lockdown fell sharply.

Indeed, data from Moneyfacts suggested that the number of mortgages available for landlords fell from almost 3,000 in March to just over 1,500 in April.

And although product numbers have jumped back up to around 1,800 in July, options for high loan-to-value investments remain limited.

Landlords buying at lower loan-to-values, however, may find some hugely attractive rates available as lenders look to capitalise on the fact the housing market is moving once again.