Skip to main content
Rentals & Sales
← Back to Landlord News
Landlord Today27 January 2026Low risk

HMRC Intensifies Stamp Duty Scrutiny: What London Landlords Must Do Now

HMRC has sharply increased investigations into Stamp Duty Land Tax (SDLT) declarations for second properties following controversies and recent surcharge rate hikes. London landlords must ensure accurate SDLT reporting, avoid misleading claims, and maintain robust documentation to navigate this high-risk environment. This article outlines the practical steps landlords should take immediately to safeguard their investments and remain compliant.

HMRCStamp Duty Land TaxSDLTLondon landlordsproperty tax compliancesecond homes
HMRC Intensifies Stamp Duty Scrutiny: What London Landlords Must Do Now

Why HMRC Is Cracking Down on SDLT Declarations

In the 2024/25 tax year, HM Revenue & Customs (HMRC) has significantly increased its scrutiny of SDLT returns related to second property purchases. Investigations into suspected non-compliance have surged by 88%, focusing on issues such as incorrectly claiming a second property as a replacement of a main residence or misclassifying properties to evade the 3% surcharge introduced for additional dwellings. This clampdown follows public controversies, including ones involving political figures like Angela Rayner, and recent hikes in SDLT rates for buy-to-let and second homes.

For London landlords, where property values and transaction volumes are high, this means a substantially increased risk of HMRC audits and penalties if SDLT declarations are inaccurate or misleading.

What This Means for Different Landlord Profiles

  • Single-unit landlords: Even owning one buy-to-let property requires care; incorrect claims about main residence replacement may prompt investigation. HMRC is verifying genuine replacements versus attempts to avoid the surcharge.

  • HMO landlords: Landlords managing Houses in Multiple Occupation must accurately classify property use. Misstatements can lead to surcharge avoidance accusations.

  • Portfolio owners: Large landlords with multiple properties face increased risk due to the volume and complexity of transactions; maintaining thorough documentation is essential.

  • Accidental landlords: Those who inherited or converted their main home into a rental property must be especially cautious with main residence status claims.

Practical Steps to Get SDLT Declarations Right Now

  1. Review Your SDLT Declaration Processes: Audit recent SDLT returns for accuracy, especially claims about main residence replacements and property use categories. Ensure your documentation supports your declarations.

  2. Educate Yourself and Your Clients: Understand the criteria for main residence replacement claims and commercial use exceptions. For example, a second property is exempt from the surcharge only if you genuinely sell your main home within three years of buying the new property.

  3. Maintain Comprehensive Records: Keep purchase agreements, correspondence, and evidence of property use and residency status securely filed. HMRC investigations hinge on documentary proof.

  4. Consult Tax Professionals for Complex Cases: Transactions involving trusts, transfers to partners, or mixed commercial and residential use require expert advice to ensure SDLT is properly applied.

  5. Be Cautious with SDLT Refund Claims: Ensure all refund claims related to property condition vulnerabilities are well-supported to avoid triggering audits.

Preparing for Possible HMRC Investigations

Given the heightened scrutiny, landlords should prepare by:

  • Conducting internal compliance audits.
  • Training staff or agents managing SDLT submissions.
  • Setting workflows to flag unusual transactions or claims.

Next Steps for London Landlords

Schedule a portfolio review concentrating on SDLT compliance. Work with your accountant or solicitor to verify your SDLT declarations are accurate and defensible. If you use agents, ensure they are fully briefed on HMRC's latest expectations.

How Rentals & Sales Can Support Your Compliance

Our team offers tailored compliance audits, including SDLT declaration reviews and pricing strategy consultations reflecting the latest tax changes. We help landlords implement efficient workflows and documentation practices to meet HMRC scrutiny confidently.

Disclaimer: This article provides general guidance and does not constitute legal or tax advice. Landlords should consult qualified professionals for advice specific to their circumstances.