Market Value Election: Paying SDLT Upfront vs Staircasing
A detailed comparison of the two SDLT elections for shared ownership, with worked examples at £250,000, £400,000 and £600,000.
Key Takeaways
- Market value election pays SDLT on 100% of property value upfront; the default pay-in-stages option pays SDLT only on your initial share premium
- Market value election is irrevocable: once filed on the SDLT return it cannot be changed
- FTB relief applies to the full property value (up to £500k) under market value election, potentially making upfront SDLT zero
- Market value election eliminates all future SDLT on staircasing transactions, regardless of property value growth
- Under the pay-in-stages option, no further SDLT or returns are required on staircasing tranches up to 80% cumulative ownership; the transaction that crosses 80% is a linked-transactions calculation on the cumulative consideration paid
- For FTBs on properties between £300k and £500k who plan to staircase fully, market value election is almost always better
- Above £500k, FTB relief is unavailable and market value election means paying higher SDLT on a large value
- Your solicitor must explicitly select the market value option on the SDLT1 form, so confirm this before exchange
In this article
What Is the Market Value Election?
When buying a new shared ownership property in England or Northern Ireland, you can choose between two methods for calculating your stamp duty land tax. The market value election is the option to pay SDLT on the full market value of the entire property at the time of your initial purchase, even though you are only buying a share.
The alternative (the default), sometimes called the pay-in-stages option, calculates SDLT only on the price you pay for your initial share. See the initial share purchase guide for an overview of both options in the context of your first purchase. Note that the market value election is only available on the grant of a new shared ownership lease; it is not available on a resale shared ownership assignment.
The market value election exists because HMRC recognises that shared ownership buyers who plan to staircase to full ownership might otherwise have SDLT re-engage when they eventually cross the 80% line. By allowing an upfront election on the full value, HMRC effectively consolidates all future SDLT obligations into a single payment at the outset.
How SDLT Is Calculated Under Each Method
Standard SDLT rates apply under both methods. The difference is only in what figure the rates are applied to.
Pay in Stages (Default): Rates Applied to Initial Share Value
SDLT rates are applied to the price you pay for your initial share. For a 40% share of a £300,000 property, the SDLT calculation uses £120,000 as the consideration. Using standard rates: 0% on the first £125,000 (all £120,000 falls here) gives zero SDLT.
No further SDLT is due and no SDLT return is required for staircasing tranches while your cumulative ownership remains at or below 80%. The transaction that takes you over 80% is treated as linked with any earlier and subsequent staircasing purchases, and SDLT is then calculated on the cumulative consideration actually paid for those linked share purchases, not on current market value.
Market Value Election: Rates Applied to Full Property Value
SDLT rates are applied to the full open market value of the property at the time of your initial purchase. For the same £300,000 property: 0% on £125,000 = £0; 2% on £125,001 to £250,000 = £2,500; 5% on £250,001 to £300,000 = £2,500. Total SDLT: £5,000. This is due in full at initial completion, regardless of your share percentage.
| Rate Band | SDLT Rate | FTB Rate |
|---|---|---|
| £0 – £125,000 | 0% | 0% |
| £125,001 – £250,000 | 2% | 0% (up to £300k) |
| £250,001 – £300,000 | 5% | 0% (up to £300k) |
| £300,001 – £500,000 | 5% | 5% (FTB relief stops at £500k) |
| £500,001 – £925,000 | 5% | 5% (no FTB relief) |
| £925,001 – £1,500,000 | 10% | 10% (no FTB relief) |
How to Make the Market Value Election
The market value election is made by your solicitor when completing the SDLT1 return, which is filed with HMRC after completion of your purchase. The return must be filed within 14 days of the effective date (usually completion day). Your solicitor selects the market value treatment option within the return, which formally records the election with HMRC.
You should discuss your preferred election with your solicitor before exchange of contracts, ideally during the early stages of the conveyancing process. The solicitor needs to know your intentions in advance, particularly regarding first-time buyer status, your share percentage, and your staircasing plans, to provide accurate advice on which election is more advantageous.
There is no separate form or application to HMRC for the election. It is built into the standard SDLT1 return. Your solicitor does not need to notify the housing association of your election choice, though it is good practice to keep a record of which election was made in case of any future queries when you staircase.
Irrevocable Choice: What That Means
The market value election is irreversible once filed. HMRC will not allow an amendment to change the election after the return has been submitted. This means that if you make the market value election and later decide you do not want to staircase, you have paid more SDLT than necessary with no recourse.
Similarly, if you do not make the market value election and later wish you had (for example, because you discover staircasing SDLT will be significant), you cannot elect retrospectively. The decision is final at the point of your initial return filing.
Before You Decide
Instruct your solicitor to model both scenarios using the actual figures for your property, your initial share, and your intended staircasing path. A decision made on the basis of accurate calculations prevents costly regrets on an irrevocable election.
FTB Relief Advantage Under Market Value Election
The market value election combines powerfully with first-time buyer relief. FTB relief raises the nil-rate band from £125,000 to £300,000 and keeps the rate at 5% up to £500,000. Properties above £500,000 attract no FTB relief at all.
When a first-time buyer makes the market value election on a property valued at exactly £300,000, the entire value falls within the FTB nil-rate band, so total SDLT is zero, yet no future staircasing SDLT will ever be due. This is the most tax-efficient outcome possible for any shared ownership purchase. For properties up to £500,000, FTB relief under market value election can save thousands compared to paying staircasing SDLT at standard rates in future years when FTB relief is no longer available.
Conversely, if you use the staircasing election as a first-time buyer and your initial share is under £125,000, you also pay zero SDLT initially. But when you later staircase, by which point you already own property, standard rates apply. The total SDLT paid across the full ownership journey could be considerably higher than under the market value election with FTB relief.
Worked Example: £250,000 Property, 50% Initial Share
Scenario Details
- Property market value: £250,000
- Initial share: 50% (£125,000)
- Buyer: First-time buyer, plans to staircase to 100%
- Future staircase: 50% at assumed same £250,000 value (£125,000)
Staircasing Election
| Initial SDLT on £125,000 | £0 |
| Staircase SDLT on £125,000 | £0 |
| Total SDLT | £0 |
Market Value Election (FTB)
| £0–£250,000 @ 0% (FTB band) | £0 |
| Future staircasing SDLT | £0 |
| Total SDLT | £0 |
Verdict: Both elections result in zero total SDLT at £250,000. The market value election provides the additional certainty of zero future staircasing SDLT, but has no SDLT cost advantage here. The staircasing election is arguably simpler for this scenario.
Worked Example: £400,000 Property, 40% Initial Share
Scenario Details
- Property market value at initial purchase: £400,000
- Initial share: 40% (£160,000)
- Buyer: First-time buyer, plans to staircase to 100%
- Staircasing path under the pay-in-stages option: 30% tranche at £420,000 value (£126,000), then 30% tranche at £440,000 value (£132,000), the second of which takes cumulative ownership to 100% and crosses 80%
Pay in Stages (FTB initially)
| Initial: £160k share (FTB nil rate) | £0 |
| Tranche 1 to 70% (£126k, stays below 80%, no SDLT, no return) | £0 |
| Tranche 2 to 100% (£132k, crosses 80%): linked total £126k + £132k = £258k; SDLT 0% on £125k + 2% on £125k + 5% on £8k = £2,900 | £2,900 |
| Total SDLT | £2,900 |
Market Value Election (FTB on £400k)
| £0–£300k @ 0% (FTB nil band) | £0 |
| £300k–£400k @ 5% | £5,000 |
| All staircasing SDLT | £0 |
| Total SDLT | £5,000 |
Verdict: At £400,000 with staircasing to 100%, the pay-in-stages option comes out cheaper here: the initial share is within FTB nil rate, the 70% tranche is not even in the SDLT system, and only the 80% crossing transaction is calculated. That calculation is run on the cumulative £258,000 of linked staircased consideration, not on the current market value of the whole property, giving £2,900 of SDLT. The market value election costs £2,100 more on these numbers. This result can flip if property values rise substantially before the final staircase.
Worked Example: £600,000 Property, 50% Initial Share
Scenario Details
- Property market value at initial purchase: £600,000
- Initial share: 50% (£300,000)
- Buyer: Standard buyer (not FTB), plans to staircase to 100%
- Later staircase: remaining 50% at £650,000 value (£325,000), taking the buyer from 50% straight to 100% and therefore crossing the 80% line
Pay in Stages (std rates)
| Initial: £300k share. 0% on £125k + 2% on £125k + 5% on £50k | £5,000 |
| Final staircase (crosses 80%): linked cumulative staircased consideration £325k. SDLT 0% on £125k + 2% on £125k + 5% on £75k = £6,250 | £6,250 |
| Total SDLT | £11,250 |
The final staircase is the only staircasing transaction, so the linked set is just that one transaction. SDLT is based on the cumulative staircased consideration, which in this case is the single £325k payment.
Market Value Election (std rates on £600k)
| £0–£125k @ 0% | £0 |
| £125k–£250k @ 2% | £2,500 |
| £250k–£600k @ 5% | £17,500 |
| All staircasing SDLT | £0 |
| Total SDLT | £20,000 |
Verdict: At £600,000 without FTB relief, the pay-in-stages option saves £8,750 overall. The market value election only becomes competitive at this price point if property values rise very substantially before staircasing (making the final staircase linked consideration much higher than modelled here). The pay-in-stages option is better for non-FTBs at this value.
When Market Value Election Wins
The market value election outperforms the pay-in-stages option in a specific set of circumstances:
- First-time buyer, property between £300,000 and £500,000, plan to staircase fully: FTB relief on the full market value can make the upfront SDLT competitive or even zero, whereas the eventual linked-transaction SDLT on the 80% crossing would be charged at standard rates (FTB relief does not apply to staircasing).
- Staircasing to 100% planned with substantial consideration: If the cumulative consideration you will pay for the staircased shares will be large, the linked SDLT at the 80% crossing could exceed the market value election upfront cost.
- Significant property value growth expected: Market value election locks in today's property value for SDLT purposes. If the property rises substantially before you staircase, the consideration you pay for later shares will be higher and the linked SDLT on the 80% crossing correspondingly larger.
When Pay-in-Stages Wins
The default pay-in-stages option is the better choice in most other scenarios:
- Initial share under £125,000: Zero SDLT now, and no further SDLT or returns while you remain at or below 80% cumulative ownership. Very hard for the market value election to beat this.
- Property above £500,000 (any buyer): FTB relief is unavailable above £500,000, so the market value election means a large upfront bill with no discount. The pay-in-stages option defers any SDLT until the 80% crossing, with the linked calculation based on the cumulative consideration paid rather than the whole property value.
- Plan to stop at or below 80%: If you expect to own 80% or less, you may never pay further SDLT at all under the pay-in-stages option. The market value election would be pure waste.
- Uncertain about staircasing: If you might not staircase at all, paying market value SDLT is purely wasteful. Pay-in-stages only creates further SDLT liability if and when you cross the 80% line.
Practical Considerations
Beyond the pure SDLT maths, several practical factors affect which election is right for you:
Cash availability: The market value election requires more cash at completion, sometimes thousands of pounds more than the staircasing election. If funds are tight, the staircasing election may be the only feasible option even if the market value election would save money over the long term.
Mortgage capacity: Some buyers fund SDLT from their mortgage through product structures or gifted deposits. If your mortgage capacity is stretched, a lower initial SDLT bill could matter.
Solicitor advice: The election is a legal decision with long-term financial consequences. Always take specific legal advice, not just general guidance, before deciding. Your solicitor should calculate both options with your actual figures.
For further context on how staircasing SDLT works in practice once the election is made, see the staircasing stamp duty guide and the shared ownership complete guide.
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Frequently Asked Questions
What is the market value election for shared ownership?
The market value election is the option to pay SDLT on the full open market value of the property at the time your new shared ownership lease is granted. Once made, no further SDLT is due on any future staircasing transactions, ever. The alternative is the default pay-in-stages option, which calculates SDLT on your initial share premium only; no further SDLT is due on staircasing tranches until cumulative ownership crosses 80%, and the crossing transaction is then a linked transaction on the cumulative consideration paid for all staircased shares.
When is the market value election better than the staircasing election?
The market value election is generally better for first-time buyers on properties between £300,000 and £500,000 who plan to staircase to full ownership. FTB relief on the full market value can make the upfront SDLT zero or very low, while future staircasing SDLT at standard rates could be considerably higher. It is also advantageous if significant property value growth is expected before staircasing.
Can I change my mind after making the market value election?
No. The market value election is irrevocable once made on the SDLT return. This is why calculating both options carefully before filing is essential. Your solicitor cannot amend the election after submission, and HMRC will not allow retrospective changes.
Does the market value election apply to resale shared ownership?
No. The market value election under FA 2003 Schedule 9 paragraph 2 is only available on the grant of a new shared ownership lease by a qualifying body. A resale shared ownership purchase is an assignment of an existing lease from the outgoing leaseholder, not a new grant, so the election does not apply. On a resale, SDLT is paid on the price you pay for the assignment of the share, and the pay-in-stages rules continue to apply to any later staircasing.
What does "full market value" mean for the election?
Full market value means the price the property would achieve if sold on the open market at the date of your purchase. This is usually the price agreed between you and the housing association (or seller in a resale) as confirmed by a RICS valuation. It is the total property value, not just your share, that forms the basis of SDLT under the market value election.
Reviewed by
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Calculate My Stamp Duty UK to help buyers understand the complex world of property transaction taxes.