How Can Property Developers Benefit from Stamp Duty Land Tax Exemptions?

January 24, 2024

The UK property market has been volatile over the last few years. However, it remains one of the most attractive investment opportunities.

There is talk in the media at the moment about removing the Stamp Duty burden from those who are downsizing. This would help to free up houses that are no longer fit-for-purpose and help more people get onto the property ladder.

With property prices and mortgage rates still high, those who are keen investors in bricks and mortar might be looking to find more ways of squeezing the most out of their investments and saving money where they can.

Looking into the different exemptions and reliefs from Stamp Duty Land Tax, might be a way to optimise your tax liability, however it is crucial to consult with a tax specialist.

In this blog we give you an overview of the different reliefs and exemptions available, to those who are not purchasing property in the traditional way.

Multiple Dwellings Relief (MDR)

MDR can be claimed when multiple residential properties are purchased in a single transaction. Developers may benefit from reduced SDLT rates when purchasing multiple dwellings in a single transaction compared to buying them individually.

Property Development Relief

This relief is available if the property is acquired for the purpose of property development and not for resale. Developers may qualify for relief if they purchase properties that require substantial renovation or redevelopment.

Charities Relief

SDLT exemptions may be available when land or property is purchased by a charity or a non-profit organization. Developers involved in projects for charitable purposes may be eligible for this relief.

Social Housing Relief

SDLT relief is available for properties acquired for use as social housing. Developers involved in projects to provide affordable housing may qualify for this relief.

First-Time Buyers Relief

This relief is aimed at helping first-time buyers get on the property ladder. Developers may consider targeting properties that appeal to first-time buyers, as this can stimulate demand and potentially reduce SDLT for eligible purchasers.

Annual Tax on Enveloped Dwellings (ATED) Relief

ATED applies to high-value residential properties owned by companies. Developers may benefit from relief if the property is acquired for development purposes.

Mixed-Use Property Relief

If a property has both residential and non-residential elements, developers may qualify for relief on the non-residential portion of the property.

Chain Break Relief

If a property trader steps in to restore a property chain which has been broken, 100% relief of SDLT may be available to that trader. The qualifying status of the seller must be established in order to take advantage of this relief.

Probate Relief

Properties purchased from executors of an estate, may be exempt from paying stamp duty as long as the transaction meets a certain criteria.

Derelict / Unhabitable Property Relief

You do not pay stamp duty on an uninhabitable property. If you buy a property which does not include basic amenities, such as heating or water, or perhaps needs asbestos removal then it is not considered fit for residential purposes.

More Information on SDLT Reliefs or Exemptions

If you have a keen interest in property and are looking for ways to reduce the costs of your investment, then we would be happy to speak to you about the pros and cons of purchasing via alternative means and what your stamp duty tax position will likely be.

Property developers should seek professional advice from tax experts to ensure compliance with current regulations and to optimise their tax position. Additionally, it’s advisable to stay updated on any changes in tax laws that may impact property transactions, as the legal landscape often changes.

To speak to a Stamp Duty Land Tax specialist, please call 020 3523 9125 or email us at info@bonhamandbrook.co.uk.