Buying a new home before you have sold your old one? You could be paying thousands of pounds more in stamp duty than you need to.
When you buy an additional residential property, a 5% surcharge applies on top of the standard SDLT rates across every band. That means on a £400,000 purchase you are paying an extra £20,000 purely because you happen to own two properties at the same time, even briefly.
The good news is there is a specific relief for people who are genuinely replacing their main home. It is known as Condition D under Schedule 4ZA of the Finance Act 2003, and it means the surcharge does not apply at all, provided you meet a few conditions.
To qualify, you must intend to live in the new property as your only or main residence. You must have lived in your old property as your main residence at some point in the three years before buying the new one. And the old property must be sold within 36 months of completing the new purchase.
Imagine, James and his wife buy a new home in March 2025 for £500,000 while still owning their previous home. At completion, the surcharge applies and they pay an extra £25,000 in SDLT. They then sell their old home in October 2026, which is within the 36-month window. They can amend their SDLT return and claim the entire £25,000 surcharge back.
If you sell the old home on the same day as completing the new purchase, the surcharge does not apply at all and you never pay it in the first place. The refund route is for when there is a gap between the two transactions. Though it could be a cashflow trouble, it is often choose this route than panic selling the original property for a throw away price.