You will be logged off in  seconds due to inactivity and risk losing your quote. Click here to continue using this web page.

We're paying thousands more than expected on our stamp duty

Joel Clyne 13 May 2022

When buying a property, ensure that you factor in the cost of Stamp Duty before purchasing. Believe me!

After our offer had been accepted and we'd instructed the conveyancers to oversee the purchase process, we were sent a breakdown of their costs. Legal fees, transaction fees, drainage and water searches were all there. Honestly, they don't miss a trick! Yet, the figure that jumped out at us was our Stamp Duty costs. Let me explain why.


How much stamp duty should I pay if I own two properties?


The situation we find ourselves in isn't particularly common. My partner is a first-time buyer, whereas I own a property that I rent out. But we live together in a different rented property. There is no intention of selling the house that I own.

Initially, we believed that we would pay the higher Stamp Duty rate as I would own two properties. According to the Government Stamp Duty website: "You'll usually have to pay 3% on top of SDLT rates if buying a new residential property means you'll own more than one." 

The website continues: "You will not pay the extra 3% SDLT if the property you're buying is replacing your main residence and that has already been sold."

However, this is where our confusion began.

We classed the property that we live in and rent as our main residence as we've lived there for two years, and our bills, bank statements and council tax are paid from that address.

We looked a little further into it because we could potentially be saving thousands. We came across this article, which we could relate to, and this also backed up the belief that we should only pay the standard rate and not the higher rate.

We even ran our situation through the Government's Stamp Duty Calculator, and it came out to the same conclusion that we should pay the standard rate only.

So, after the research we went through before viewing houses, putting offers in, and just the general stress of buying a home, to see the figure thousands of pounds higher than expected was a shock.

Speaking to HMRC


We raised the issue with the conveyancers, showing them what we'd found and what we believed we should be paying. Naturally, they stuck to what they thought we should pay, which led to us contacting HMRC for a definitive answer.

As with the conveyancers, we explained our situation, pointed to the wording on the Government's website and stated that we believed that we shouldn't be paying the higher rate of tax.

Essentially, our case came down to the definition of 'main residence'. The Government's definition of 'main residence' is that it must be owned and not necessarily the place where most time is spent. Therefore, our rented home (that we share) isn't technically classed as our 'main residence', but the home that we rent out is - as this is owned. You can see where our confusion stemmed from. Feel free to read up on their definition here.

Whether comforting or not, apparently, this is quite a common issue that is raised. Although, having an additional £5,000+ on the total purchase price of the property doesn't sit so well. 

If there's anything you learn from these blog posts, let it be to do all of your homework before entering into this process and know how much you'll be spending. Buying houses ain't cheap!

Why you should be wary of the highest market appraisal on your home
Why you should be wary of the highest market appraisal on your home

Rhino Home Protect 04 December 2023

As you stand in your well-loved home, deciding to sell and move on might be exciting and bittersweet. Naturally, you want to get the best value for your property, and one of the initial steps is getting a market appraisal. It sounds straightforward – a professional assessing your property's worth – but the highest figure isn't always the best option. In this guide, we'll unravel why you should be cautious of the highest market appraisal on you...

Read more

The Legal Implications of Gazundering in the Property Market
The Legal Implications of Gazundering in the Property Market

Rhino Home Protect 27 November 2023

As a diligent home seller in the UK, you've navigated the market with determination. Efforts paid off with a potential buyer, negotiations, and excitement. Yet, nearing success, "gazundering" strikes - the agreed price drops, raising legal and ethical dilemmas.

Read more

What is Gazundering?
What is Gazundering?

Rhino Home Protect 20 November 2023

After months of dedicated searching, numerous property viewings, and painstaking negotiations, you, as a home seller, are relieved to have finally found a potential buyer for your cherished property in the vibrant heart of London. As you approach the finish line with a sense of accomplishment, a sudden twist takes you by surprise. The price you had previously agreed upon is unexpectedly slashed.

Read more