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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Reliefs: Disadvantaged areas relief

Definition of residential property FA03/S116

FA03/S116 sets out the statutory definition of residential property for the purposes of disadvantaged areas relief. Residential property is (FA03/S116(1)(a)) a building that, at the date of the relevant transaction, is

  • used as a dwelling,
  • suitable for use as a dwelling, or
  • in the process of being constructed or adapted for such use.

The definition includes (FA03/S116(1)(b)) land that is or forms part of the garden or grounds of a such building (including any building or structure on such land).

FA03/S116(2) specifies that buildings used for the following purposes are residential property:

  • residential accommodation for school pupils;
  • residential accommodation for students (other than a hall of residence);
  • residential accommodation for members of the armed forces, or
  • an institution which is the sole or main residence of at least 90% of its residents and is not excluded by FA03/S116(3) (see SDLTM 20071).

If a building meets any one of these separate tests it will be treated as residential property, as will any garden or grounds belonging to it or any interests or rights attaching to it.

“Garden or grounds” includes land which is needed for the reasonable enjoyment of the dwelling, having regard to the size and nature of the dwelling. HMRC will apply a similar test to that applied for the capital gains tax relief for main residences (section 222(3) Taxation of Chargeable Gains Act 1992).