Understanding Holiday Let Stamp Duty

When purchasing a property in the UK, Stamp Duty Land Tax (SDLT) is one of the costs involved, and it’s a topic that’s been at the forefront of conversations in recent months, due to the changes announced by the Labour government. The 2024 autumn budget has changed the rules around how much stamp duty people must pay when purchasing a second residential-style property.

For buyers hoping to purchase a holiday let, this won’t come as welcome news, as it drives up those initial costs when investing in property. The question is, how much has stamp duty risen by, and how much do people have to pay when buying an additional property?

How is stamp duty calculated?

The amount of SDLT that an individual must pay is calculated in relation to the property’s value. As detailed on the government’s website, from April 2025 the rates for residential property purchases will be as follows:

Property price	SDLT rate
Properties up to £125,000	0%
Properties up to £250,000	2%
Properties up to £925,000	5%
Properties up to £1,500,000	10%
Properties above £1,500,000	12%

These rates apply when someone is purchasing a residential property; things change when it comes to buying additional properties, such as buy-to-lets and holiday lets.

Stamp duty rates for additional properties

The HMRC provides comprehensive information as to the amount of stamp duty due on additional properties: “You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.” Therefore, in the case of purchasing a holiday let property, from April 2025, an individual will have to pay more stamp duty. The additional higher rate of 5% has risen from the previous 3% and could amount to several thousand pounds.

It’s important to note that there is a caveat to these higher rates: if a property is valued at less than £40,000, the buyer will receive SDLT relief. Similarly, when buying a plot of land, even if there’s the intention to build a second property on that land, the higher rates won’t apply.

Where a buyer isn’t exempt, the higher rates for additional properties will be as follows:

Property price	SDLT higher rate
Properties up to £125,000	5%
Properties up to £250,000	7%
Properties up to £925,000	10%
Properties up to £1,500,000	15%
Properties above £1,500,000	17%

In figures:

Before April 2025, if a buyer purchases a second property for £500,000, they will pay:

• 5% on the first £250,000: £12,500
• 10% on the final £250,000: £25,000

In total: SDLT of £37,500.

From April 2025, if a buyer purchases a second property for £500,000, they will pay:

• 5% on the first £125,000: £6,250
• 7% on the next £125,000: £8,750
• 10% on the final £250,000: £25,000

In total: SDLT of £40,000.

What does this mean for buyers?

It’s evident that the new SDLT rates mean that there will be increased costs for people purchasing a holiday let property. However, it’s important to understand the wider context of what’s happening in the holiday letting market; there’s still great demand from holiday makers from the UK and abroad, and so the industry continues to thrive. As a result, holiday let owners can be confident that their initial financial investment has the potential to reap great rewards. If managed to high standards and marketed well, holiday homes offer the chance to generate a healthy income.

What’s more, in light of the government’s new regulations, not only with regards to SDLT but to council tax (which has increased on additional properties) and furnished holiday lets (a status which will be abolished, along with its tax benefits, in 2025), there’s been a flurry of people selling their second properties. The result is that buyers can now benefit from an abundance of quality properties on the market, and lower property prices.