Stamp Duty Land Tax on Shared Ownership Property / Staircasing

Shared-ownership purchases makes home ownership a more affordable and viable option because you can part buy and part rent your home. It is an option that is appealing to a wider variety of purchasers.

A shared ownership agreement allows you to pay rent on the share of the property that you do not buy outright. We can assist in purchasing a 25%, 50% or 75% share in your new home. In effect, the larger the share you purchase the less rent you pay on the share you do not own.

As you can imagine there are stamp duty implications you must be aware of before you proceed with your purchase.

Upon finalising the purchase, you can elect to pay the full Stamp Duty Land Tax (SDLT) at the outset on the full market value of the property. In this instance there will be no further stamp duty charges applicable.

There is a special SDLT relief option which means Staircasing payments are not charged SDLT until the purchaser owns an 80% of the share in the freehold. Staircasing is a process in which the owner is able to buy further shares of the freehold title-this could be as little as 10% at a time.

In respect of the SDLT payments-any payment made over the 80% threshold will immediately attract stamp duty land tax.

Example:
Full Market Value of the Property:                     ₤250,000.00
Shared Ownership Purchase (50% share)     ₤125,000.00
No Stamp Duty payable.
First Staircasing Payment (25%)                       ₤62,500.00
This first payment will not attract stamp duty as the owner does not own at least 80% of the freehold.
Second Staircasing Payment (25%)                   ₤62,500.00
This second payment, means the purchaser will now own 100% of the property therefore incurs SDLT on the full market value of ₤250,000.00.

If you are purchasing a shared ownership property and have any questions relating to the Stamp Duty Land Tax (SDLT) Implications please feel free to contact us for advice.