Second Home Stamp Duty Surcharge 2026: The 5% Rule Explained with Examples

Buying a second home in England has become significantly more expensive since October 2024. The Stamp Duty Land Tax (SDLT) surcharge on additional residential properties rose from 3% to 5%, adding thousands of pounds to purchase costs for buy-to-let investors, holiday home buyers and those moving home before selling their existing property.

This guide explains the 2026 rates, works through a realistic example, and covers the refund rules and exemptions you need to know.

What Is the Second Home SDLT Surcharge?

When you buy a residential property in England and you already own another residential property anywhere in the world, an additional SDLT surcharge applies on top of the standard rates. In 2026 that surcharge is 5% on every pound of the purchase price.

The surcharge is not just on the amount above a threshold -- it applies to the entire purchase price, banded in the same way as standard SDLT. This makes it substantially more expensive than many buyers expect.

2026 SDLT Rates: Second Home vs Main Residence

Note: First-time buyers purchasing their sole main residence have a higher 0% threshold (GBP 425,000) and reduced rates up to GBP 625,000, but first-time buyer relief never applies to second home purchases.

Worked Example: GBP 350,000 Second Home

Let us compare the SDLT on a GBP 350,000 purchase as a main residence versus as a second home.

Main Residence (No Surcharge)

Second Home (5% Surcharge Applies)

The 5% surcharge costs an additional GBP 17,500 on a GBP 350,000 purchase compared with buying as a main residence. That is the entire 5% surcharge on GBP 250,000 plus an extra 5% on the GBP 100,000 above the threshold.

The Three-Year Refund: How It Works

A common situation is where someone buys a new home before selling their old one -- perhaps because they want to move quickly or the chain has fallen through. In this case, they technically own two residential properties at the date of purchase, so the surcharge applies.

HMRC allows a refund if you sell your previous main home within three years of purchasing the new one.

Refund Process

1. Pay the full SDLT including the 5% surcharge at completion
2. Sell your previous main home within three years
3. Submit a refund claim to HMRC within 12 months of that sale (or 12 months of the SDLT return filing date for the purchase, whichever is later)
4. HMRC repays the surcharge element

In our GBP 350,000 example, the refundable surcharge would be GBP 17,500 -- a significant sum worth claiming. The refund is not automatic: you must actively apply via HMRC's online service.

Properties Exempt from the Surcharge

Not all property purchases trigger the second home surcharge. Key exemptions include:

Properties below GBP 40,000: Any residential property purchased for less than GBP 40,000 is exempt from SDLT entirely, including the surcharge.

Caravans and mobile homes: Not classed as dwellings for SDLT purposes.

Houseboats: Similarly excluded from the dwelling definition.

Purchases by companies (different rules): Companies buying residential property pay the 15% higher rate for enveloped dwellings if the property is worth more than GBP 500,000 and is not used for certain business purposes -- different rules apply and specialist advice is needed.

Replacing your main home: If you complete the sale of your previous main home on the same day as, or before, purchasing the new one, the surcharge does not apply (you are replacing, not adding).

Multiple Dwellings Relief: Abolished April 2024

Until 31 May 2024, buyers purchasing multiple properties in a single transaction could use multiple dwellings relief (MDR) to reduce their SDLT bill. MDR averaged the purchase price across the number of dwellings, reducing each property into a lower SDLT band.

MDR was abolished for transactions completing on or after 1 June 2024. This means:

• Portfolio landlords buying ten properties from one vendor in a single transaction can no longer split the price across individual units
• The only exception remaining is the six-or-more dwellings rule, where buyers purchasing six or more properties can elect to use non-residential SDLT rates (which have no 5% surcharge) rather than residential rates

For most landlords buying one or two properties, MDR abolition simply removes an option that was previously available.

Scotland, Wales and Northern Ireland

This guide covers England only. Scotland uses Land and Buildings Transaction Tax (LBTT) with its own additional dwelling supplement of 8% (as of April 2024). Wales uses Land Transaction Tax (LTT) with a higher residential rates charge of 4%. Northern Ireland uses SDLT like England, so the 5% surcharge applies there too.

If you are buying in Scotland or Wales, the rates and rules differ materially from those described here.

Practical Planning Points

Exchange contracts early. The surcharge is determined by the date of completion, not exchange. If you exchanged contracts before 31 October 2024 but completed after, check the transitional rules carefully.

Check overseas property. The surcharge applies if you own a residential property anywhere in the world, not just in the UK. A holiday apartment abroad counts.

Consider timing of sale. If you are selling your main home and buying simultaneously, ensure completion of the sale happens on or before completion of the purchase to avoid the surcharge.

Buy-to-let through a limited company. Corporate structures have their own SDLT considerations, including the annual tax on enveloped dwellings (ATED) for higher-value properties. Take professional advice before using a corporate wrapper purely to avoid SDLT -- HMRC scrutinises these structures carefully.

Quick Reference: Second Home SDLT in 2026

Use the CalcHub SDLT calculator to get an instant second home stamp duty calculation for any purchase price in 2026, including the standard rate comparison, surcharge total and an estimate of the refundable amount if you are replacing a main home.