Where stamp duty sits now

Two changes have pushed up the entry cost of a buy-to-let. The additional-dwellings surcharge is 5%, applied on top of standard residential rates, and the nil-rate threshold has reverted to £125,000 from the temporary £250,000. For investors, almost the entire purchase price is now taxed, and taxed at a premium.

This applies whether you buy in your personal name or through a limited company. There is no SPV discount on stamp duty.

A worked example

Take a £250,000 apartment, a typical regional buy-to-let, bought as an additional property:

  • 5% on the first £125,000 = £6,250
  • 7% on the next £125,000 = £8,750
  • Total SDLT = £15,000

That is 6% of the purchase price gone before you have furnished the flat. On a £400,000 purchase the bill rises to roughly £27,500. On a £180,000 Liverpool one-bed it is around £9,650.

The point is simple: stamp duty is now one of the largest single line items in your acquisition budget, and it is pure cost with no return attached.

What it does to your numbers

Stamp duty does not change your yield, which is calculated on price, but it does change your true cost basis and therefore your real return. Fold it in properly:

  • Add it to your total capital in. Your return on money invested is measured against price plus SDLT plus legals plus furnishing, not the headline price.
  • It lengthens your break-even. A £15,000 tax bill is roughly a year and a half of net rent on a typical regional flat. That is how long you work just to earn the tax back.
  • It rewards holding. The higher the transaction cost, the worse short flips look and the better long holds look. Stamp duty is an argument for patience.

How we factor it in

Every appraisal we run is on a fully loaded basis: purchase price, 5% surcharge SDLT, legal costs, furnishing and a sensible void allowance. A deal has to work after all of that, not before it. If the only way the numbers stack up is by quietly ignoring stamp duty, it is not a deal.

The bottom line

The 5% surcharge and the lower threshold have made the buy-to-let entry cost materially higher, and that cost falls hardest on short holds and over-traded portfolios. For long-term investors buying income-producing stock in strong rental markets, it is a real but manageable headwind. Price it in honestly, hold for the long run, and let the rent earn it back.