Stamp duty on shared ownership properties

Updated 23/09/2022: Today the Chancellor, Kwasi Kwarteng, announced a cut to stamp duty; the threshold at which the tax falls due has been raised to £250,000 from its current £125,000 level. Under the changes announced by the chancellor, anyone spending £250,000 on a property in England will avoid £2,500 in stamp duty charges as it was previously charged at 2% between £125,000 and £250,000.

Stamp duty can seem like a daunting & bewildering subject for anyone looking to purchase home. Here is our guide to stamp duty and how it affects you when buying a shared ownership property.

What is stamp duty?

When you buy a property or land in the UK the government requires you to pay tax on it. This is what is referred to as ‘stamp duty’.

The name comes from a time in history when a physical stamp had to be attached on the landownership document to show that stamp duty had been paid before the document was legally effective. Of course, modern versions of the tax no longer require an actual stamp on a piece of paper, but the name has stuck.

In 2014, the stamp duty system was overhauled. Now, instead of paying a single rate on the whole property, depending on the cost of the property you are buying, you might end up paying one rate on a certain portion of the property and a different rate on another. It’s a bit like with your income tax which has a basic rate and a higher rate.

What is shared ownership?

Shared ownership is an alternative which is commonly known as benefitting first time buyers. It gives people the opportunity to purchase a share in a new build or resales property, and as well as first time buyers, there’s also an option for over-55s known as OPSO (Older Person’s Shared Ownership) which is something that we offer as part of a government-backed scheme. With a Platinum Skies property, you purchase a share that you can afford, from as little as 25% of the property, and pay affordable rental payments on the rest.

This is also referred to as part buy/part rent. The purchasers can buy outright or get a mortgage on the share that they own. The owners then pay a rent on the remainder.

As you only pay a percentage of the full market value, you can use the freed-up money for things that matter most. Maybe that’s a long overdue holiday, a new car, saving for a rainy day or simply helping out your family.

Do I need to pay stamp duty on a shared ownership property?

On shared ownership properties the owner will need to pay stamp duty on the share you are purchasing. However, often as you are purchasing the property at a fraction of its market value, you can avoid paying stamp duty all together. For example:

If you purchased 50% of a Platinum Skies apartment worth £230,000, the portion you own will be worth £115,000, which would be below the stamp duty threshold.

If you are unsure about stamp duty, please speak to our team. We can often make arrangements to help to sort this out for you.

What is the stamp duty holiday and when does it end?

The level at which stamp duty has to be paid was raised from £125,000 to £500,000 in July 2020. The move by the government was aimed at boosting a property market hit by lockdown.

Following a Government announcement, this tax break came to an end on 30th June 2021.

From 23rd September 2022:

Following the announcement from Chancellor Kwasi Kwarteng, permanent changes to stamp duty have come into effect:
• £0-£250,000 = 0%
• £250,001-£925,000 = 5%
• £925,000-£1,500,000 = 10%
• £1,500,000+ = 12%

How can I find out how much stamp duty I will need to pay?

You can work this out by using the government’s Stamp Duty Land Tax (SDLT) calculator to find out how much you would pay.

Want to find out more about shared ownership?

Platinum Skies doesn’t just build homes for the over 55s. Through the government-backed Shared Ownership scheme, homeowners access their equity to fund a flexible part-buy, part-rent plan.

This allows them to live in a safe and secure community of like-minded folk, with access to a range of care, support and lifestyle services, including an onsite Community Manager.