If you’re lucky enough to be able to afford a second home, you probably have enough to be able to afford the additional SDLT on the property. But it’s always good to understand your liabilities here.

The government has targeted second home buyers as a source of revenue. If you can afford two houses, you can afford to pay extra taxes, the thinking goes. But sometimes there are specific reasons why people buy a second home.

Sometimes people buy second properties to solve a problem

Occasionally, people buy second homes not because they are very wealthy, but because they feel they need to. Maybe a marriage has broken down, and one party is left in the family home with the children, and the other party is looking to secure housing without renting. As long as their name is on the deeds of the first house, the purchase of a new house will be classified as a second home.

Sometimes, people will buy their next house, before selling their existing house. This may happen so that they can secure the house of their dreams, or to break a complicated chain or because they’re moving for a new job, and need to secure housing. They might take a bridging loan, borrow from parents, or find the funding elsewhere, and sell their first property when they can.

How does SDLT work for people who want a second home?

Whether you’re buying a second home as a holiday home, or to solve a problem, SDLT works the same way. It is charged at a premium on the second house purchase.

SDLT rates on a single property are currently:

Value	SDLT rate
Up to £125,000	Zero
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

If you buy a second property, the rates above will apply, plus an additional 5% on the total value of the property.

Value	SDLT rate
On the entire value	5%

A worked example

Miss Brown sells her first house, and buys her second home. She therefore only owns one property at a time. The second property costs £300,000.

The SDLT is £5,000.

Mr Green moves out of the family home and buys a house for himself. He therefore owns two properties. The second property costs £300,000.

The SDLT is £20,000.

You can apply for a refund

The difference in those two values above is large. If it’s your only house, you pay £5,000; if it’s a second home, it’s £20,000. And that’s on a £300,000 house. The differences increase as the value of the second property increases.

But for those who only want the second house for a relatively short period of time, there is some good news, in the form of a refund.

If you have sold your first residence within three years of purchasing the second house, you can apply for a refund.

Please note, SDLT is complicated. There are many different reliefs and exemptions. And rates can differ from those listed above, e.g. if you are a non-UK resident. For expert advice and more information, please contact Declan Hayes on 01756 692888 or email declan.hayes@awbclaw.co.uk

Further reading:

Have you bought a house and it came with unforeseen problems?

“Buyer beware” and “safe as houses”… two contradictory phrases.

When you’re in a pickle with your house sale, think indemnity insurance

Gov.UK: Stamp Duty Land Tax