Buy-to-Let Stamp Duty Guide
Everything landlords need to know about stamp duty on investment properties in 2026.
In this article
Key Points for Landlords (January 2026)
- •5% surcharge applies to all buy-to-let purchases
- •Surcharge increased from 3% in April 2025
- •Companies always pay the surcharge on residential property
- •Non-UK residents pay an additional 2% on top
How BTL Stamp Duty Works
Buy-to-let properties are treated as additional properties for stamp duty purposes. This means you pay the standard SDLT rates plus the 5% additional property surcharge (increased from 3% in April 2025).
The surcharge applies even if you don't currently own any other property, as long as the property is purchased as an investment to be rented out rather than as your main residence.
BTL Stamp Duty Rates
The combined rates (standard + 5% surcharge) for buy-to-let properties:
| Band | Standard Rate | BTL Rate (+5%) |
|---|---|---|
| £0 - £125,000 | 0% | 5% |
| £125,001 - £250,000 | 2% | 7% |
| £250,001 - £925,000 | 5% | 10% |
| £925,001 - £1,500,000 | 10% | 15% |
| £1,500,001+ | 12% | 17% |
Example Calculations
| Property Price | Standard SDLT | BTL SDLT | Extra Cost |
|---|---|---|---|
| £150,000 | £500 | £8,000 | +£7,500 |
| £250,000 | £2,500 | £15,000 | +£12,500 |
| £400,000 | £10,000 | £30,000 | +£20,000 |
Buying Through a Company
Company Purchases
When a limited company purchases residential property, the 5% surcharge always applies, regardless of whether the company already owns other properties.
However, buying through a company may offer other tax advantages for landlords, including corporation tax on profits and more flexibility with mortgage interest relief. Consult a tax advisor for your specific situation.
Non-UK Resident Landlords
If you're a non-UK resident purchasing a buy-to-let property, you'll pay an additional 2% surcharge on top of the 5% additional property surcharge. This means the total surcharge would be 7% above standard rates.
Example: Non-UK Resident BTL Purchase
A £300,000 buy-to-let property for a non-UK resident would cost:
Standard SDLT: £5,000 + BTL surcharge (5%): £15,000 + Non-resident (2%): £6,000 = £26,000 total
First-Time Landlords
Even if this is your first investment property, you'll still pay the 5% surcharge if you already own a property to live in. The surcharge only doesn't apply if:
- You're selling your main residence and buying a single property to live in
- You don't own any other property anywhere in the world
Tax Considerations for Landlords
Beyond stamp duty, landlords should be aware of other tax implications:
- Income Tax: Rental income is taxable at your marginal rate
- Mortgage Interest: Tax relief is limited to basic rate (20%)
- Capital Gains Tax: Payable on profit when you sell
- Wear and Tear: Replaced by actual replacement costs
Market Considerations
The buy-to-let market has evolved significantly following the April 2025 changes. Higher stamp duty costs have impacted investor returns, particularly in areas with lower rental yields. However, long-term demand for rental properties remains strong, and careful property selection can still provide good returns. Consider factors like location, property type, tenant demand, and potential for capital appreciation when making investment decisions.
Rental Yield Calculations
When evaluating potential buy-to-let investments, calculate rental yield to assess returns. Rental yield is annual rental income expressed as percentage of property value. A higher yield helps offset the increased stamp duty costs and other expenses. Consider both gross and net yield after all expenses including mortgage interest, maintenance, management fees, and void periods. Properties in university towns, city centers, or areas with good transport links often offer better yields.
Mortgage Considerations
Buy-to-let mortgages typically require higher deposits than residential mortgages and come with different interest rates. Lenders assess affordability based on expected rental income rather than your personal income alone. The stress test requires rental income to cover at least 125% of mortgage payments, though this varies between lenders. Shop around for competitive buy-to-let mortgage deals and consider speaking to a specialist broker who understands the buy-to-let market.
Portfolio Management
As your portfolio grows, managing multiple properties becomes more complex. Consider whether to manage properties yourself or engage a letting agent. Agents typically charge 8-15% of rental income but handle tenant finding, rent collection, maintenance, and legal compliance. The time saved and reduced stress may justify the cost, especially if you have demanding full-time work or properties in different geographic areas.
Regulatory Compliance
Landlords must comply with numerous regulations covering safety, tenant rights, and property standards. This includes gas safety certificates, electrical safety checks, fire alarms, energy performance certificates, and protecting tenant deposits in approved schemes. Failure to comply can result in significant fines and legal action. Stay informed about regulatory changes and budget for ongoing compliance costs when calculating your investment returns.
Exit Strategies
Plan your exit strategy before purchasing. Options include selling the property, selling to tenants, transferring to family members, or continuing to hold for income and appreciation. Each has different tax implications, particularly regarding capital gains tax. Consider how long you intend to hold the property, market conditions, and your personal financial goals. Professional tax advice can help optimize your position when selling or transferring property ownership.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.