The 3% Stamp Duty Surcharge on Second Homes: A Full Explanation

The additional-dwelling surcharge (sometimes called the "higher rates for additional dwellings" or HRAD) is a surcharge on SDLT that applies when a buyer purchases a residential property and, on the date of completion, already owns one or more other residential properties anywhere in the world. It was introduced by George Osborne in April 2016 at 3%, raised by Rachel Reeves to 5% on 31 October 2024, and remains at 5% today.

Despite the name, it can apply to first-time buyers in some circumstances (e.g. if they own a single overseas property they didn't know counted). And it can fail to apply to people you might think owe it (e.g. if they're replacing their only or main residence on the same day).

The basic mechanics

The surcharge is 5% of the entire purchase price, on top of standard SDLT rates. So a £400,000 second-home purchase pays £30,000 SDLT (£10,000 standard + £20,000 surcharge) instead of the £10,000 a sole-residence buyer would pay.

The surcharge has no thresholds — it applies from £1 of consideration upward. Even a £50,000 purchase of a leasehold flat as a buy-to-let attracts the 5% surcharge, on top of the standard 0% on the first £125,000.

When the surcharge applies

The surcharge applies if all three of the following are true at the date of completion:

(1) The transaction is the purchase of a major interest in a dwelling. (2) The purchase price is £40,000 or more. (3) The buyer owns (or is treated as owning) one or more other dwellings, anywhere in the world, with a market value of £40,000 or more — AND the new purchase is not a replacement of the buyer's only or main residence.

The "replacement of main residence" relief

If you're selling your previous main residence on the same day as completing on your new one, the surcharge doesn't apply — you're simply replacing one home with another. If you can't synchronise the dates (because the sale of your previous home is delayed), the surcharge applies up front, but you can reclaim it provided you dispose of the previous main residence within 36 months of the new completion. This is the standard surcharge refund pattern. See our deep dive on the standard refund process.

Common surprises

Overseas property counts. An apartment in Spain or a holiday home in France owned by the buyer counts as a dwelling for surcharge purposes. Even a property you've never visited that was gifted to you years ago can trigger the surcharge.

Inherited property counts. If you've inherited a property within the last 36 months, special rules can give you some relief — but in general, an inherited dwelling counts as a dwelling you own. See our piece on inherited property and SDLT.

Spouses are treated as one unit. If you're married or in a civil partnership, your spouse's property ownership counts for surcharge purposes. You can't escape the surcharge by buying in the name of the spouse who doesn't own the other property.

Companies always pay it. A company has no concept of a "main residence", so the surcharge applies to every residential property purchase by a company, even the first one.

When the surcharge doesn't apply

Replacement of main residence on completion day. Sale of previous home and purchase of new home complete the same day — no surcharge.

Non-residential or mixed-use property. A pub, an office, a property with a working commercial element — these are not residential, so the surcharge doesn't apply.

Properties under £40,000. The surcharge doesn't apply to purchases under £40,000.

Certain leases. Very short leases (under 21 years remaining) are not chargeable interests for surcharge purposes.