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Stamp duty surcharge could harm the very homeowners it is meant to help

HomeOwners Alliance welcomes the stamp duty surcharge policy on second homes in principle, but the design “is so flawed that the government must go back to the drawing board"

Over the past couple of months, we have been looking closely at the proposed stamp duty surcharge on second homes. We asked our members and website visitors to have their say in our recent article on the Stamp Duty Consultation.

Now, we’ve published our report on the proposed changes and highlighted the key issues that will affect homeowners.

Our view of the stamp duty surcharge

We strongly welcome the government’s ambition to help homeowners, and in particular, to recognise homeownership in the stamp duty system.

We have called for a stamp duty surcharge when people buy residential properties as second homes or as buy-to-let investments.

We support in principle the government’s proposals announced in the Autumn statement to charge a 3% stamp duty surcharge when people buy additional residential properties.

However, we think that the way the government is planning to introduce the surcharge is so overly complex and flawed that it will lead to massive unintended consequences.

The Chancellor is expected to announce the final proposal in his March Budget.

In our report, we have suggested many remedies to iron out some of the worst problems with the proposals, but point out that almost none of the problems would exist if the government used the more simple system.

We have consulted widely with members and other stakeholders, and some of the problems we identified in numerous examples and real life case studies are:

Many legitimate homebuyers will be hit by the 3% stamp duty surcharge at the last minute, forcing them to give up purchasing their new home

A first-time-homebuyer will unfairly be charged the stamp duty surcharge if they jointly purchase their home with someone who already owns a property

First-time-homebuyers could pay more stamp duty than an existing homeowner with a major property portfolio

Separating couples could be hit by the surcharge when one of them sets up a new family home

Existing homeowners moving to new build homes – where the timetable is dictated by the developer – will generally have to pay the stamp duty surcharge, only to reclaim it from the government later. This will particularly hit hard-stretched pensioner downshifters moving into newly built retirement homes

Homeowners who move for work and rent out their homes will have to pay the stamp duty surcharge when they sell their old home to buy a new one in their new area

First-time-homebuyers could pay the same stamp duty as a foreign speculative property investor

People with a cheap buy-to-let property wanting to buy a more expensive home will get a huge financial incentive to “churn” their properties in the market to reduce the stamp duty bill

Homeowners wanting to buy additional properties will try to avoid the stamp duty surcharge by putting buy-to-let properties and second homes in their children’s names

We called for a stamp duty surcharge that applied simply whenever someone buys a residential property that will not be their primary residence, such as a second home or buy-to-let investment (aligning it with capital gains tax, which also doesn’t apply to primary residences, but does to residential properties used for other purposes).

However, the Treasury has devised a far more complicated scheme where everyone can buy one residential property, for any purpose, without paying the surcharge, but they must pay the surcharge if they are buying a second property for any purpose (even as a home), unless it is replacing an existing home within 18 months of the transaction.

People who buy a new home before they have sold their old one will have to pay the stamp duty surcharge, and then later reclaim it from the government.



  • The Government announced in the Autumn statement higher rates of Stamp Duty Land Tax on purchases of additional residential properties and is currently consulting on the detail of the proposals.
  • HomeOwners Alliance originally proposed in A Fairer Stamp Duty, that stamp duty should be higher for property investors.

Read our full report here


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