Stamp duty relief on outright purchase

We are thinking of purchasing 5 properties. We did some research and found that if you are provider of social housing you get SDLT relief. However, there is some ambiguity whether the Council considers as for profit” or “not for profit” organisation. Hence, can be classified as of provider of social housing 

I would like to whether any other council has done outright purchase and received SDLT relief. If yes, on what basis.

Thank you.

  • Dear Mr Shah,

    I’d like to introduce myself as the editor of TISonline Local Authority Housing board. I have asked the board members for views on your question and two members have responded as follows.

    I hope this is helpful and I expect our members would be willing to respond to any follow up questions you may have.

  • Response 1:  An interesting question. I can’t provide specific examples where SDLT relief has been claimed by an authority in this way, but there are circumstances under which it might happen.

    I am not a legal expert, but it seems to me that the question centres on whether a local authority falls under the definition of “registered social landlord” used in the HMRC SDLT Manual. If so, there would appear to be two routes. The first of these only relates to a publicly subsidised purchase by a ‘profit-making registered provider of social housing’. This would excludes a local authority, but might include an arms length management organisation or other wholly-owned subsidiary (if it is a profit-making RP).

    The second route relates to purchases by a non-profit registered provider (which normally includes local authorities), and allows for relief to be claimed in respect of:

    1. purchases by housing providers that are controlled by their tenants (which excludes local authorities), or
    2. sales made by a ‘qualifying body’ (including sales by an RP or a local authority), or
    3. purchases being funded by the use of specific powers (primarily housing grant).

    There would also be potential for an authority to receive SDLT relief under a third route, if it uses a compulsory purchase order to buy a property to enable a development to proceed. However, that looks like a completely different scenario (and would only prevent duplication of the SDLT charge when the property is sold on to a developer).

    This is clearly an area for specialists, and I think it would be sensible for the enquirer to check their interpretation with the authority’s legal advisors before deciding on their course of action.

  • Response 2: ‘Registered social landlord’ as used by HMRC is the old fashioned term for what are now defined as ‘registered providers’ (RPs).

    Most local authorities are RPs and this presumably includes all with retained housing stock and who retain an HRA. The Regulator of Social Housing has the definitive list of RPs on their web-site.

    I don't think there are, or could be, any ‘for profit’ ALMOs. Nor do I think there can be any ambiguity about local authorities which are not ‘for profit’.

    When I worked for a local authority we purchased quite a lot of property and we never obtained complete SDLT relief. However, there are issues such as multiple dwellings relief, which make it worthwhile to get some specialist advice, eg Capita, PWC, etc. My authority subscribed to a tax advisory service provided by one of these consultants and if you have access to this type of service this is the quickest source of expert advice. SDLT is surprisingly complicated and few councils have much expertise either in their finance or legal departments.

  • Thank you for your responses. It seems that Council is not entitled to SDLT relief, unless subsidies by a government grant or purchase via subsidiary. I am quite surprised that Council are not considered as Registered Social provider as they is what we do. I will ask our tax advise for help.

    Thank you once again.