Buying a Second Property? What the 5% SDLT Surcharge Could Cost You In 2026

Second property ownership is more common than you might think. Around 2.1 million households in England reported having at least one second property in 2021/22, while 35% of those with a second home said long-term investment was one of their reasons for having it.

But buying an additional property can come with significant extra cost.

The Stamp Duty Land Tax (SDLT) additional property surcharge means buyers who already own residential property will usually pay 5% (on top of the standard SDLT rates when purchasing another property in England or Northern Ireland).

That can add thousands to the cost of a second home, investment property or buy-to-let. And the surcharge can even apply when you’re simply purchasing your next home before selling your current one.

So, who pays the additional 5%? And when can you get it back?

What Is the 5% SDLT Additional Property Surcharge?

The additional property surcharge is part of the higher SDLT rates for additional dwellings.

From 31st October 2024, the surcharge increased from 3% to 5% above the standard residential SDLT rates.

It generally applies when buying a residential property worth £40,000 or more means you’ll own more than one qualifying residential property.

This surcharge doesn’t just mean calculating 5% of the purchase price. Instead, higher rates apply across each SDLT band.

Who Has to Pay the Additional 5% SDLT?

You may need to pay the higher rates if you buy a second home, buy-to-let or investment property while already owning another residential property.

And it isn’t just UK property that counts. Residential properties you own or part-own anywhere in the world can be relevant.

The rules can also catch joint buyers. If one person purchasing the property meets the conditions for the higher rates, the whole transaction can be subject to them.

Married couples and civil partners are generally treated together for these purposes, unless they are permanently separated.

Who May Be Exempt From the SDLT Surcharge?

You won’t normally pay the additional-property rates if the new property will be the only residential property you own.

You may also avoid the surcharge when replacing your main residence if you’ve already sold or given away your previous main home.

Certain properties and transactions are outside the higher-rate rules. For example, property worth less than £40,000 is generally disregarded, as are some mixed-use properties.

Because exceptions depend on the circumstances, it’s worth checking your SDLT position before completing a purchase.

How Much SDLT Will You Pay on an Additional Property?

For additional residential properties in 2026, the SDLT rates are:

For example, an additional property costing £300,000 would generate an SDLT bill of £20,000: £6,250 on the first £125,000, £8,750 on the next £125,000 and £5,000 on the final £50,000.

For a £500,000 additional property, the bill would be £40,000.

Buying a New Home Before Selling Your Current Home

This is where the surcharge can catch you out.

If you complete on your new main home before selling your previous one, you temporarily own two properties. This means you’ll usually have to pay the higher SDLT rates.

However, this doesn’t necessarily mean losing that money permanently.

If you sell or give away your previous main residence within three years of buying the new one, you may be able to reclaim the higher-rate element.

How to Claim an SDLT Surcharge Refund

If you’re eligible, you can apply to HMRC for a refund after selling your previous main home.

You’ll need information about the original purchase and sale, including the property’s address, SDLT transaction reference, purchase date and details of the previous main residence you’ve sold.

Claims can be made using HMRC’s refund process. Your solicitor, agent or conveyancer may also be able to make the claim on your behalf with the appropriate authority.

SDLT Refund Deadline: How Long Do You Have?

Selling your old home within three years is only part of the deadline.

For previous main residences sold on or after 29th October 2018, you generally need to claim your refund within 12 months of whichever is later: the sale of your previous main residence or the filing date of the SDLT return for your new home.

There are limited provisions for exceptional circumstances where you couldn’t sell your previous home within three years.

Keep records of the purchase, sale and SDLT paid so you have the information needed to support your claim.

Common SDLT Surcharge Mistakes to Avoid

One of the biggest mistakes is assuming the surcharge won’t apply because you intend the new property to be your main home. If you still own your previous home when the new purchase completes, you may initially have to pay the higher rates.

Other common problems include overlooking overseas properties, forgetting that another joint buyer owns property, incorrectly calculating the SDLT bands or missing the refund deadline.

Checking before completion can prevent an unexpected bill later.

Getting the Additional Property Surcharge Right

The 5% SDLT surcharge can significantly increase the cost of buying an additional property. But whether you need to pay it, and whether you can later claim a refund, depends on your individual circumstances.

Checking your position before completion can help you budget accurately, avoid mistakes and make sure you don’t miss out on a refund you’re entitled to.

If you’d like expert guidance on SDLT, additional property purchases or an SDLT refund claim, book a consultation or contact us today on 03300 88 66 86 or email [email protected].

About the author

Owais Bombaywala
Working closely with individuals and businesses to help grow their business requires a significant amount of experience and industry knowledge. Owais is BA (Hons) Accounting and Finance and Member of ACCA. Besides being a compliance champion, he specialises in Property tax planning. With over 7 years of experience in Accountancy and Tax world, our clients count on us to give them timely and up to date advise to help them make the right move. Owais works closely with some of the DNS’s most valued clients to give them the confidence they need to focus on their business. He is known for his calm nature and proactive approach. At DNS, we proud to be a modern and client centric firm. Our advise doesn’t just look at what’s best for your business moreover our aim is to help you achieve your personal goals. Away from work, he resolve family disputes and provide care and support to elderly people. He is a founding member of Human welfare organisation Hounslow.