Investor Insight: The Stamp Duty Loophole Most Landlords Don’t Know About
Is There Really a Stamp Duty ‘Loophole’?
Yes, and it’s been part of UK tax legislation for years, but many landlords, portfolio buyers and developers still overlook it.
HMRC rules say:
If you buy six or more dwellings in a single transaction, the purchase is treated as “non-residential” for Stamp Duty purposes.
That means:
No 5% additional property surcharge
No higher non-UK resident surcharge (2%)
Much lower SDLT bands overall
For portfolio investors, this is one of the few remaining levers that can significantly reduce acquisition costs.
Why the “Six or More” Rule Matters
Buying residential properties one by one triggers:
Standard residential SDLT, plus
The 5% additional dwelling surcharge,
And, if you’re not UK resident — the 2% non-resident surcharge.
This means a non-UK resident buying a BTL faces:
Residential SDLT Rates (England & Northern Ireland)
Additional property surcharge increased from 3% to 5%.
| Property Price Band | Main Residence | Additional Property | Non-UK Resident |
|---|---|---|---|
| Up to £125,000 | 0% | 5% | 7% |
| £125,001 – £250,000 | 2% | 7% | 9% |
| £250,001 – £925,000 | 5% | 10% | 12% |
| £925,001 – £1.5m | 10% | 15% | 17% |
| Over £1.5m | 12% | 17% | 19% |
Note: SDLT is charged on a slice basis and rates above apply to residential property in England & Northern Ireland.
But if you buy six or more properties at once?
You pay non-residential SDLT, which:
Has no surcharges, and
Uses lower bands than residential SDLT.
For portfolio builders, that difference is huge.
SDLT Rate Comparison (Residential vs Non-Residential)
Here’s a simple example for clarity:
Residential SDLT + 5% surcharge (standard landlord)
(e.g., 6 properties at £150,000 each portfolio purchase in multiple transactions)
Approximate SDLT: £48,000
Residential SDLT + 7% surcharges (non-UK landlord)
Approximate SDLT: £66,000
Non-Residential SDLT (6+ properties in one deal)
Approximate SDLT: £34,500
Tax saving potential:
💰 £13,500 compared to a UK landlord buying individually
💰 £31,500 compared to a non-UK resident buying individually
Even on smaller deals, the savings stack up quickly.
When Does This Strategy Make Sense?
This approach is most attractive for:
1. Portfolio buyers acquiring blocks or clusters of units
For example, buying 6–12 flats from a single vendor or developer.
2. Investors purchasing multiple terraced or student-let properties from the same landlord
Common in university towns or HMO hotspots.
3. Limited companies using retained profits or director’s loans to scale
Non-residential SDLT aligns perfectly with SPV growth strategies.
4. Buyers targeting bulk deals
Distressed portfolios, probate sales, housing association disposals etc.
If the properties are part of one contract, one negotiation, or one linked transaction, the rule applies.
Important: The Transaction Must Be Linked
HMRC require the properties to be:
Purchased from the same seller,
On the same day or under linked contracts,
Within a single logical transaction or portfolio.
Buying six properties randomly from six different sellers does not qualify.
Case Study (Easy to Turn Into a Napkin Visual)
Scenario:
Investor buys 6 terraced houses at £150,000 each
Total consideration: £900,000
If bought individually (standard BTL SDLT + 5% surcharge):
Approx SDLT per property: £8,000
Total = £48,000
But because of tiered bands on multiple purchases, real total often ends up much higher: ~£80,000
If bought as one deal under Non-Residential SDLT:
0% on first £150,000
2% on £150,001 to £250,000
5% on the rest
Total ≈ £34,500
Saving: £45,500
Plus: no surcharge, no non-resident premium, and usually simpler legal work.
Pros of Using the 6+ Property SDLT Rule
✔ Lower SDLT
✔ No surcharges
✔ Cleaner for SPV structuring
✔ More efficient to finance (one commercial/portfolio loan)
✔ Less legal duplication
✔ Easier negotiations — bulk buyers get better discounts
Cons / Watch-Points
⚠ Lenders treat this as “commercial,” not residential
You’ll usually use:
Portfolio lenders
Commercial mortgages
Semi-commercial lenders
Sometimes higher fees, but scalable debt
⚠ Cashflow & void risks scale too
Six properties mean six boilers, six tenants, six roofs.
⚠ Legal complexity
One misdescribed unit can delay the whole portfolio completion.
⚠ Valuation approach may differ
Often valued on an investment basis, not bricks-and-mortar.
Should You Use This Strategy in your portfolio?
For many investors — yes.
The combination of:
Flattening mortgage rates
Softer prices in certain regions
Rising rental demand
Landlord exits creating portfolio sales
…makes bulk deals more available and more strategic than at any time since 2010.
If you run an SPV (or plan to), buying 6 or more properties in a single transaction is one of the strongest still-legal ways to reduce acquisition taxes.
One Smart Action to Take This Week
If you’re planning to grow your portfolio, ask us to model the SDLT difference between buying individually vs buying as a 6-property portfolio.
For the right deal, the savings alone can make the numbers work.