01

SDLT rates for investment property purchases in 2026

Residential property purchases that attract the additional dwelling surcharge (5% from 30 October 2024) are subject to the following combined rates in 2026/27. The SDLT is calculated on a banded basis — each band applies only to the portion of the purchase price within that band.

Band 1: £0 to £125,000 — standard rate 0%, surcharge 5%, total 5%. Band 2: £125,001 to £250,000 — standard rate 2%, surcharge 5%, total 7%. Band 3: £250,001 to £925,000 — standard rate 5%, surcharge 5%, total 10%. Band 4: £925,001 to £1,500,000 — standard rate 10%, surcharge 5%, total 15%. Band 5: above £1,500,000 — standard rate 12%, surcharge 5%, total 17%.

Calculation example for a £300,000 buy-to-let purchase: Band 1 (£0-£125,000) at 5% = £6,250. Band 2 (£125,001-£250,000) at 7% = £8,750. Band 3 (£250,001-£300,000) at 10% = £5,000. Total SDLT: £20,000. Note: this is the SDLT payable by an individual investor who already owns a property. A first-time buyer purchasing their main home at the same price pays: Band 1 (£0-£300,000) at 0% under FTB relief = £0. Total SDLT: £0. The difference: £20,000 — purely from the additional dwelling surcharge.

02

The surcharge refund — when it applies and how to claim

The additional dwelling surcharge paid on a property purchase can be reclaimed if the purchaser sells their previous main residence within three years of the purchase. This refund provision is specifically designed for people who have purchased a new main home before selling their old one — bridging the transaction gap.

The conditions for the refund: (1) the property on which the surcharge was paid must have been purchased as the purchaser's new main residence; (2) the purchaser must have owned another property (their previous main residence) at the date of the new purchase; (3) the previous main residence must be sold within three years of the date of purchase of the new property; (4) the refund claim must be made within 12 months of the sale of the previous main residence.

The refund process: apply to HMRC using the online SDLT refund service at gov.uk. The refund is the difference between the SDLT paid with the surcharge and the SDLT that would have been payable without it — effectively the entire 5% surcharge on the new property purchase price.

The refund provision does not apply to buy-to-let or investment property purchases where the property is not the purchaser's main residence. An investor who purchases a buy-to-let while already owning their home cannot reclaim the surcharge — the buy-to-let is not a main residence and the surcharge is a permanent cost of the investment.

03

SDLT planning — multiple dwellings relief, mixed use and commercial property

Several SDLT planning strategies can legitimately reduce the SDLT bill on property transactions.

Multiple dwellings relief (MDR) was abolished on 1 June 2024 — it no longer applies to transactions completing after that date. MDR previously allowed the SDLT on a transaction purchasing multiple residential properties to be calculated on the average price per dwelling rather than the total price — a significant saving on portfolio purchases. Its abolition removes this planning option entirely.

Mixed use SDLT rates: property that includes both residential and commercial elements (a flat above a shop, a house with a commercial workshop, a farm with a farmhouse) may qualify for non-residential SDLT rates rather than residential rates. Non-residential rates do not include the additional dwelling surcharge and have a lower rate structure: 0% up to £150,000, 2% from £150,001 to £250,000, 5% above £250,000. For a £400,000 mixed-use property: non-residential SDLT = £8,500 versus residential SDLT with surcharge of £30,000 — a saving of £21,500. HMRC scrutinises mixed-use claims carefully and the commercial element must be genuine.

Commercial property purchases: commercial property is not subject to the residential SDLT rates or the additional dwelling surcharge. An investor who purchases a commercial property and converts it to residential use pays commercial SDLT rates on the purchase (typically lower) but may face residential rates if the property has already been converted at the time of purchase.

Six or more dwellings: purchasing six or more residential properties in a single transaction allows the non-residential SDLT rates to apply — eliminating the additional dwelling surcharge. For portfolio investors purchasing blocks of flats, this can create significant SDLT savings compared to purchasing the same properties in separate transactions.

04

SDLT and limited company purchases

A limited company purchasing residential property pays SDLT at the standard residential rates plus the 5% additional dwelling surcharge on every purchase — there is no company equivalent of the primary residence exemption. The 5% surcharge applies to the company's first residential property purchase and every subsequent one.

The 15% flat rate: a specific SDLT rate of 15% applies to residential property purchases above £500,000 by certain corporate bodies (companies, collective investment schemes) unless specific reliefs apply. This 15% flat rate is a single rate applied to the entire purchase price — not the banded structure. For a £600,000 residential property purchased by a company: 15% flat rate SDLT = £90,000. Versus an individual investor: banded rates plus 5% surcharge = approximately £44,000. The 15% flat rate more than doubles the SDLT on the same purchase.

Reliefs from the 15% rate: the 15% flat rate does not apply to properties that will be let commercially at arm's length, developed for resale, or used for certain qualifying purposes (employee accommodation, care homes). Property rental businesses that let properties commercially and do not intend to occupy them qualify for relief from the 15% flat rate — paying instead the standard banded rates plus the 5% surcharge. This relief must be claimed on the SDLT return and maintained — if the property is subsequently occupied by a connected person, the relief is clawed back.

SDLT planning for company purchases: for investment portfolios operated through limited companies, the SDLT position is broadly the same as for individual investors (banded rates plus 5% surcharge) provided the commercial letting relief applies. The company structure does not provide SDLT savings — only income tax and corporation tax differences discussed in the rental income report.

05

SDLT and the first-time buyer — reliefs and conditions

First-time buyer SDLT relief reduces the SDLT bill for eligible purchasers of their main residence. In 2026/27 (after the temporary increased thresholds expired on 31 March 2025), the relief applies as follows: 0% on the first £300,000 of purchase price, 5% on the portion between £300,001 and £500,000. For properties above £500,000, no first-time buyer relief applies and standard rates are charged on the full price.

The first-time buyer conditions: all purchasers named on the title must be first-time buyers — if one is not, relief does not apply. A first-time buyer is defined as someone who has never owned a residential property anywhere in the world. This includes properties inherited, gifted or received as part of a settlement — any previous residential property ownership disqualifies. The property must be intended as the purchaser's only or main residence.

For couples where one is a first-time buyer and one is not: no first-time buyer relief applies to the purchase. The full standard SDLT rates apply. This frequently occurs where one partner previously owned a property before the relationship or had a property settlement in a divorce.

For SDLT planning purposes: a single first-time buyer purchasing a property and subsequently adding a partner to the title after completion — after the SDLT has been calculated on the first-time buyer basis — does not retrospectively remove the first-time buyer relief. The SDLT is assessed on the transaction at the point of purchase. Adding a co-owner subsequently is a separate transaction assessed at that point.