As England Braces for More Changes to Stamp Duty, How Will The Rented Sector Cope?

On the first of April this year – 2025 – anyone buying property in England will face substantial changes to stamp duty which will invariably make the cost of purchasing additional properties more expensive.

Indeed, there is evidence that some purchases which could not be completed before the change was due have been abandoned, the parties involved unwilling or unable to deal with the increase.

Remember also that Multiple Dwellings Relief (MDR) was abolished in England as of the first of June, 2024, another blow to the private rented sector (PRS) down south.

What do these changes to stamp duty add up to, and what are the differences between the countries which make up the United Kingdom?

Although our professional interests are mostly based in Scotland, we maintain a watchful eye on the markets throughout the UK, after all, what happens in one jurisdiction may happen in others.

So, drawing on our years of experience we’re going to take a look at stamp duty across the UK, with special attention to the changes to stamp duty in England where these have been most marked.

What is stamp duty?

Stamp duty is a land tax applied to property transactions. In England and Northern Ireland, it is properly called ‘Stamp Duty Land Tax’. In Scotland it’s ‘Land and Buildings Transaction Tax’ and in Wales ‘Land Transaction Tax’.

Basically stamp duty is a tax payable to the exchequer on any land or property transaction. The actual rates payable vary from nation to nation within the UK, and are applied on a sliding scale depending on the value of the transaction.

Stamp duty is also a popular lever for governments of all stripes to nudge housing policies; by raising or lowering stamp duty they can favour or attempt to inhibit certain transactions.

Most commonly we’ll see changes to the tax free allowance, or to the tax rate itself, in order to encourage first-time residential buyers, but higher rates may be applied to dissuade certain classes of investors.

A relevant example of this is Additional Dwellings Supplement (ADS) which is levied in order to dissuade property investors from purchasing dwellings which might otherwise be available to residential buyers.

In Scotland this is now 8% of the purchase price which is paid in addition to any other LBTT liability. In England, this additional rate is 5% of the price, and in Wales it’s also 5%. MDR is available in Scotland and Wales.

Stamp duty rates across the UK

Scotland and Wales, with their devolved powers, have the ability to set stamp duty rates at variance with the English and Northern Ireland rates. As a consequence, you’ll find different rates across the UK.

England

We’ll go into these rates and the changes in greater detail shortly, but at the time of writing the stamp duty rates are as follow:

From 1st April 2025, first-time buyers pay 0% SDLT on the first £300,00 and 5% on the amount from £300,001 – £500,000.

Scotland:

LBTT rates and bands are different in Scotland as the Scottish Government has the power to set these in their own budgets.

*For first-time buyers the nil rate band ceiling is £175,000 due to the availability of a relief.

The Additional Dwellings Supplement of 8% applies to the purchase of additional properties in Scotland, however if buying 6 or more dwellings, relief is still available, unlike in England.

Wales:

Like Scotland, Wales can set its own rates and bands, and does so. As you can see from the link, these vary considerably. Below is a summary of the additional residential rates from 1st April 2025

Revised LTT Rates for Additional Properties:

So, while there is a degree of convergence between the nations, they do differ. Accordingly, and due to the availability of MDR, property purchases for investment may be more attractive in Scotland and Wales, depending on the circumstances.

Stamp duty land Tax changes in England

The key changes to stamp duty in England is the halving of the tax exempt band from £250,000 to £125,000 (first-time buyers exempted) and the insertion of a new band from £125,001 – £250,000 of 2%.

When purchasing additional properties, higher ratesof SDLT apply:

As can be seen, these rates are substantially higher than the basic rate, and with the abolition of MDR in 2024, will not fill property investors south of the border with warm, fuzzy feelings.

We’re going to pause here and insert a link to the Stamp Duty Land Tax Manual, published by HMRC. In theory, this will answer any questions you have about SDLT in England, in practice, you may feel that a good solicitor is a much better bet!

If you were to buy a second property in England, with a purchase price of £150,000, you would face a SDLT bill of £8,000. In Scotland, with the higher rate of ADS, the LBTT bill would be £9,100.

On the face of it, buying rental property in England is cheaper than doing so in Scotland. However…

If you buy multiple properties in Scotland, you can claim multiple dwellings relief. Now, calculating MDR – and indeed whether it is worth claiming – is a bit complicated. We’ve included a link to Revenue Scotland so you can work on that migraine!

Fortunately, others have taken time to offer worked examples, so this may prove to be more enlightening. The worked example shows a substantial LBTT saving for the same total spent.

But all is not lost if you’re buying in England – enter the ‘rule of 6’. If you purchase 6 or more residential properties in a single or linked transaction, the maximum SDLT rate that will be levied is 5%. This (confusingly) is the non-residential rate.

So… Buy 6 properties at £150,000 each – a total purchase of £900,000 – and SDLT will be charged at 2% for the first £125,000, and 5% for the remainder = £22,500 per property.

The fact that HMRC has chosen to use the non-residential rate for purchases of 6 or more properties is slightly perplexing – as these are literally residential properties – but some smart civil servant probably came up with the idea when MDR expired.

Advice from the property pros

We are not tax lawyers. If you’re reading this you probably know that, but we’ll spell it out anyway! If you have questions, please refer them to your accountant or solicitor.

That said, despite the changes to SDLT which came into force at the start of April 2025, and the abolition of MDR in 2024, it appears that landlords and investors can still benefit from purchasing multiple properties in England.

Smaller landlords, looking to add a single additional property to their portfolio will suffer as a result of the changes to SDLT, however those who can invest in multiple properties will likely benefit.

As in Scotland, this is something of a double-edged sword, but the changes in England and Northern Ireland do rather streamline the process, as there is now a maximum SDLT rate of 5%.

In summary…

They say it’s an ill wind that blows no good, and this appears to be true of the changes in stamp duty.

Across the UK, property investors willing to commit to buying portfolios of six or more properties can benefit from substantial reductions in stamp duty.

How these benefits are delivered varies from jurisdiction to jurisdiction, and the thought occurs that Wales and Scotland may look at the new direction in England and wonder if this might not be the way forward.

Regardless, it’s clear that as far as governments are concerned, investors willing to buy multiple properties are more worthy of relief than small investors. This doesn’t mean that there isn’t a place for them, they’ll just pay more stamp duty sadly.

This makes it important that before entering the buy-to-let market you are quite clear about what it’s going to cost and whether the potential benefits outweigh any risks.

Stamp duty – by its many names – is sadly a cost of doing business if you want to get into the buy-to-let market. There’s no avoiding it, and governments like to use it to incentivise first-time residential buyers.

Those same governments will argue that they are also using it to encourage serious property investors, but that is only true if you are buying property portfolios of 6 or more dwellings.

This is where we can help you, with years of experience in the property investment market, we’ll offer advice and guidance to help you make the right decisions for your circumstances.

Stamp duty isn’t the most exciting subject in the world, but it matters, especially to investors. If you want to know more, and how to build your property portfolio in the most efficient manner possible, get in touch and let’s chat.

Thank you for reading!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]