Stamp Duty Land Tax for Shared Ownership

The stamp duty land tax (SDLT) for shared ownership differs compared to standard purchases and staircasing (read more about stamp duty for staircasing here) as you have 2 different options for paying.

If you need help then please call us during office hours on 0333 344 3234 (local call charges) and one of our shared ownership specialists will help you.

The two different options apply if an approved qualifying body grants you the shared ownership lease and the list of these are:

  • Local housing authority
  • Housing association
  • Housing action trust
  • Northern Ireland Housing Executive
  • Commission for the New Towns
  • Development corporations

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What are the different options to pay SDLT for Shared Ownership?

Option 1. Market Value Election - Pay it all in one go

This option is not often used when buying a shared ownership property because it requires you to pay the full amount of the stamp duty land tax liability on the full market price of the property; not just your consideration (your share of the property).

For Example

You buy a leasehold flat worth £350,000 and your share of this is 50% which means the total consideration you pay is £175,000. You have to pay SDLT on the £350,000 which is £7,500 (that's 0% on £125,000 & 2% on the next £125,000 and then 3% on £100,000) - based on current stamp duty bands - Review these here


  • You don't have to pay any stamp duty when you staircase.


  • The additional cost is considerable. Under the other option 'Paying in Stages' the stamp duty you'd pay would be less.
  • You could invest the additional cost, not on stamp duty, but in buying more of a share in the property (meaning you get to own more of your property)

Option 2. Paying in Stages

Most people buying a shared ownership property this will be the most commonly used method to pay your stamp duty; however make sure you don't get caught out in the complexities of the calculation you have to pay if you are buying a new lease (new build).

Stamp duty isn't just calculated on the consideration you pay for your share
You'll need to pay stamp duty land tax on the consideration paid (your share of the property) and, if you have a new lease, the 'net present value' of the rent you pay to the housing association over the full term of your lease.

When working out what stamp duty to pay when paying in stages you'll need to calculate two sums if it is a new lease, or just the consideration on your share, if it is a resale.

    Consideration on your share
The is the simple part of this calculation. You apply the standard rate of stamp duty applicable for the share you own. In the example above, it'd be 50% of £350,000 which is £175,000. The SDLT due on this is £1,000 (that's 0% on £125,000 and 2% on £50,000).

  • This applies to both new build and re-sale shared ownership properties. 

    Net Present Value of rent
This is the complex part of the calculation as you pay 1% stamp duty above £125,000 of the net present value of the rent you pay to the housing association over the full length of your lease (definition of net present value: the value in the present of a sum of money, in contrast to some future value it will have when it has been invested at compound interest).

  • This only applies to new build new leases.

In the example above, if for example the housing association charge 3% of the share they own of £175,000, then the rent is £5,250. If you have a 100 year lease, using the complex net present value formula, the total rent is £147,965 for which you pay £229 stamp duty (that's 0% on £125,000 and 1% on £29,965).

This means the total amount due to pay for stamp duty is £1,000 + £229 which comes to £1,229.

For ease you can use the Government's online calculator here or call our team of specialists and we will help you calculate your stamp duty 0333 344 3234.

How is the rent calculated on the Housing Association's share?

The housing association set the rent based on a percentage of their share of the property; most housing associations charge 3%.

In the example above we saw how on a £350,000 property where you buy 50%, the balance owned by the housing association is £175,000 which means they will charge you an annual fee of £5250 which is £437.50 per month.

Stamp duty on staircasing

Read our second article to find out about – Stamp Duty Land Tax for Staircasing

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