Shared Ownership Stamp Duty
How SDLT works when you part-buy and part-rent.
In this article
How Shared Ownership Works
With shared ownership, you buy a share of a property (typically 25-75%) and pay rent on the remainder. Over time, you can "staircase" to buy larger shares until you own it outright.
Two Options for Paying SDLT
When buying shared ownership, you can choose between two methods of paying stamp duty:
Option 1: Pay on Share Only
Pay SDLT only on your initial share purchase. Then pay again each time you staircase.
Best for: Lower initial shares, uncertain about staircasing
Option 2: Market Value Election
Pay SDLT on the full market value upfront. No further SDLT when staircasing.
Best for: Planning to staircase to 100%, higher value properties
Example Comparison
Property: £300,000 market value, buying 40% share (£120,000)
| Method | Initial SDLT | On Staircasing |
|---|---|---|
| Option 1: Share only | £0* | SDLT on each purchase |
| Option 2: Market value | £5,000 | £0 |
*Share under £125,000 threshold
Staircasing Rules
If you chose Option 1 (pay on share only), here's how staircasing SDLT works:
Before 80% Ownership
SDLT is based on the price paid for the additional share, not the full market value. If your additional purchase is under £125,000, no SDLT is due.
At or After 80% Ownership
Important Change
When you staircase to 80% or more, SDLT is calculated on the market value of the share being acquired, not just the price paid. This can result in higher tax bills.
First-Time Buyer Relief
Good news - first-time buyer relief applies to shared ownership purchases:
- If using Market Value Election: Relief applies if full value is under £500,000
- If paying on share only: Relief applies to initial share if it qualifies
- Can save up to £5,000 on your purchase
Which Option Should You Choose?
| Situation | Recommended |
|---|---|
| Plan to staircase to 100% | Market Value Election |
| Not sure about staircasing | Share Only |
| Initial share under £125k | Share Only |
| High-value property | Compare both options |
| First-time buyer, value under £300k | Either (FTB relief applies) |
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 Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.
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