Request a Quote
We operate with full and proactive measures to detect and report on Fraud and Money Laundering activities. We follow and apply strict processes as recommended by the Bold Legal Group comprising 650 conveyancing firms and the Conveyancing Association. Through these organisations we share intelligence on attempted fraud and money laundering activity.
Call for an instant quote: 01603 877067

SDLT- A Relationship Tax?

The changes to stamp duty (SDLT) last April were much publicised.

Individuals purchasing second homes and buy-to-let properties now pay an additional 3% SDLT. It has clearly been a huge generator of revenue for the government, but the impact of the policy on certain individuals has been somewhat mixed.

In my current role as head of New Business at MJP Conveyancing I am constantly fielding questions from prospective clients regarding their SDLT liability.

For many there is a great sense of ambiguity about their individual liability, leaving for some a rather bitter feeling of injustice.

For the serial property investor the situation is however comparably straightforward. For each additional property they acquire they will be charged the higher rate. The shrewd will put their new assets under company names, or perhaps even the names of their children, to make the purchases more cost-effective. These clients understand their position, which makes it easier to advise them and answer their questions. The focus of this particular article is on a different category of prospective client.

The scenarios where we are finding most confusion, as well as frustration, are in cases like the one outlined below:

Client A owns one property, which has been her main residence since she purchased it for £250,000 in 2012.

Client A later gets married to (or enters into a relationship with) Client B and the couple wish to purchase their martial home for £500,000.

Client B owns no other property, but Client A wishes to retain her property as a source of rental income.

Under the current SDLT guidelines, client A and B’s new purchase will attract the higher rate.

Is this fair?
When approached by clients in such a position, their answer would resoundingly be ‘no’. In the eyes of the couple they are purchasing a ‘main residence’, but this is not a view shared by HMRC. It is a point that many of our clients find difficult to comprehend when they first come to us for a quote.

To avoid the additional 3%, Client A would need to sell her house either before purchasing the new marital home or within 36 months of completion in order to claim a refund. Her wish to retain the property she acquired while single as a source of rental income is therefore restricted. It is worth mentioning that this feels particularly harsh on Client B who has never owned a property before. It is certainly a potential barrier on his ability to climb the property ladder.

So we have a first-timer buyer (Client B) being hit with the extra 3%, which in parts of the country like London can amount to additional costs in the tens of thousands. We also have an individual who purchased an asset when single (Client A), but is then penalised fiscally for wanting to purchase a main residence with her partner. You could say a form of ‘relationship tax’.

Is change required?
Arguably yes.

The answer to whether the serial property investor should be paying higher rates of tax is probably more linked to where your individual ideology lies on the political spectrum. But, should couples buying their first homes together be stung? Should an individual be penalised for acquiring an asset before the higher rate was introduced? For me the answer is no.

Finding a solution that closes off as many loop-holes as possible, as well as satisfies the government’s perpetual desire for revenue, is however somewhat trickier. I am no tax expert, but one approach that appears sensible would be for individuals to be able to voluntarily pay the higher rate on their first property. This might seem like an odd approach to take, but it all centres on how often a couple’s future first home will be purchased for a greater amount. This is not too far removed from shared ownership purchases, where buyers are given the option to pay SDLT on the full market value rather than just their percentage share.

The above approach might work for individuals entering the property market for the first time, but it does not deal with the dilemma of Client A in our earlier scenario. Client A purchased that property prior to 2016, so would have been unaware that additional SDLT may be due in the future. In this instance, if Client A could retrospectively pay the higher rate on her first property, then the couple would save £20,000. Perhaps this is an approach that could both appease HMRC and offer some relief to the new couple.

In short, changes in fiscal policy always result in winners and losers. Individuals who want to retain a property they purchased when single, but also purchase with a new partner are perhaps in the ‘loser’ category. While this may seem like a niche category, we should not forget how the rise of property prices has encouraged more people to buy their first home with friends to at least get a foot on the ladder. When one of the friends wishes to purchase a further property with their partner, you can begin to see how pressure to sell might soon create tensions and a whole variety of SDLT headaches.

While the prolific investor’s position will remain relatively clear in to the future, I expect to find more of our clients confused, hindered and ultimately frustrated by last year’s changes to SDLT.

BEN PETT - Trainee Solicitor with MJP Conveyancing
MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at

01603 877066 or 01603 877067

Our phone lines are open Monday to Friday 9am-5pm. Please note our phone lines will however be closed for lunch between the hours of 1pm and 2pm.

company details
69 - 75 Thorpe Road,
Norwich, NR1 1UA
01603 877066 or 01603 877067
FAX: 01603 230125
copyright © 2017 MJP Conveyancing. All Rights Reserved

*MJP Conveyancing LTD is authorised and regulated by the Solicitors Regulation Authority – SRA No. 590889

MJP Conveyancing Ltd is a company registered in England and Wales Registered No: 8026741 VAT Number: 157917571. A full list of the directors is available upon request. We use the word 'Partner' to refer to a Director of the Limited Company, or any employee or consultant with equivalent standing and qualification. Equality and Diversity Policy Equality and Diversity Policy Statement for Clients * - In calculating this we measure the average time it takes to reach the stage of exchange ( not the date you actually move in which is known as the completion date) from the date we receive the contract from the sellers solicitors or from when we send the contract to the buyers solicitors. This period can be longer when delays arise which are not within our control. We cannot guarantee that we can achieve this average turnaround time in all transactions. This turnaround time does not apply to leasehold and leasehold and new build transactions.
Cyber Essentials Cyber Essentials Plus