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Original poster

stamp duty higher rates for additional properties question

14 replies

glider263 · 25/01/2023 15:57

Hi, here's a question regarding the higher 3% rate. Bear with me with me while I set the scene.
We are a married couple with kids and are selling our one and only home. We exchanged late last year and will complete in 5 weeks. We have not found somewhere else yet. As we wish own a buy-to-let flat anyway in the future, we are considering the following option: we buy a modest flat more or less immediately, move into it, and once we find our long term (significantly more expensive) property we move into that and rent out the flat. All cash, no mortgage.
Is there a way around paying the higher stamp duty rate on our long term home, even though it will be our second property at the time when we buy it? Say if we agreed to pay the higher rate on the flat even though we technically don't need to as we are moving from our current home into it? Thanks.

OP posts:
dollymixtured · 25/01/2023 17:48

No is the short answer

sunseaandme · 25/01/2023 18:26

No way around it (have worked in the property industry for 8 years)

ImmigrantAlice · 25/01/2023 18:30

No. You are doing exactly what the additional amount was designed to cover.

TheCraicDealer · 25/01/2023 18:32

No. We were in a similar situation insofar as DH had a rental property he has always rented out and we were buying a home for us to live in together. Regardless of the fact that we were essentially buying our first primary residence we (well, he did) still had to pay the increased stamp duty, which was fair enough. The way it was explained to us was put very simply “will you have one more property at the end of the transaction compared to when you started”? If the answer is yes, you’re liable for the full whack on that transaction.

minipie · 25/01/2023 18:33

If you sell the flat within 3 years of buying the new house, you can reclaim the uplift part of the stamp duty paid on the new house. So you could have a buy to let for 3 years but appreciation that’s probably not what you had in mind.

pompei8309 · 25/01/2023 18:38

You’re doing it the wrong way around as well. You’ll end up paying the 3% on the more expensive property , you need to buy the house first so you will pay extra stamp duty on the cheaper flat not on the more expensive house

TheCraicDealer · 25/01/2023 18:45

That’s the OP’s question though, can they bring forward paying the excess stamp duty and pay it on the first purchase (the cheaper flat) rather than the second, i.e., the pricier family home. The answer is no.

RubyPip · 25/01/2023 18:47

No.

Any additional property to your primary residence will be subject to 3% stamp duty.

However, if you sell a primary residence then you can claim a refund of the additional stamp and you have 3 years to do so, but it must be a primary residence that has been bought and then a primary residence that has been sold.

Mildura · 25/01/2023 18:49

I had a client with exactly this scenario last year.

They spoke to a specific SDLT advisor at an accountancy firm, and I think there was a way round it.

I’ll try to check and post again.

GentlySobbing · 25/01/2023 20:09

Actually I think you can, but only if you don't ever live in the rental flat that you buy.

You need to dispose of your old house (which needs to have been your main residence), THEN buy the rental flat. No SDLT surcharge as you only own one property.

Then you buy a new main residence. You have to pay the SDLT surcharge, as you own two properties, but you can then reclaim it using the "replacement of main residence relief" that you generated from the other sale. You need to do this within 3 years of the last sale.

But if you live in the flat in between then you lose the right to reclaim the SDLT, as you will have had another main residence in between the sale of one and the purchase of another.

So you'd have to rent somewhere to live anyway, as you wouldn't be able to live in the flat. And you'd have to find a BTL mortgage lender who would lend to someone who doesn't own their own residence, and not many will.

Original poster
glider263 · 25/01/2023 21:01

Thanks everyone, I appreciate the number of people of people making the effort to reply. All as I understood it to be then (no workaround other than to sell the flat within 3 years and reclaim the additional SD paid on the house).

OP posts:
ImmigrantAlice · 25/01/2023 23:14

glider263 · 25/01/2023 21:01

Thanks everyone, I appreciate the number of people of people making the effort to reply. All as I understood it to be then (no workaround other than to sell the flat within 3 years and reclaim the additional SD paid on the house).

Correct, but the order in which you make the purchases can make a very big difference to the bill.

Deathbyfluffy · 25/01/2023 23:16

You’ll just have to pay it, like I and so many others have

Mildura · 26/01/2023 09:33

glider263 · 25/01/2023 21:01

Thanks everyone, I appreciate the number of people of people making the effort to reply. All as I understood it to be then (no workaround other than to sell the flat within 3 years and reclaim the additional SD paid on the house).

It's pretty much as @GentlySobbing has illustrated above.

However, stamp duty is a surprisingly complex tax, particularly with situations such as this, and you really need specialist advice from a tax accountant/lawyer.

Don't listen too much to a bunch of randomers on the internet - most of whom I believe are wrong.

If you want me to PM you the details of a SDLT expert let me know.

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