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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs: Alternative property finance

Land sold to a financial institution and leased to an individual: England & Walesand Northern Ireland: General overview FA03/S71A

Relief is available where there are arrangements under which:

  • a financial institution purchases a property, or a financial institution and the individual do so in common
  • the property is leased to the individual over an agreed term
  • at the end of the term the reversion is transferred to that individual

there may or may not be provision for shares in the freehold to be transferred to theindividual in stages during the term.

Provided the statutory conditions are fulfilled the lease, the transfer of the reversionand any intermediate transfers of shares in the freehold are relieved from stamp duty landtax. This means that the stamp duty land tax consequences are the same as for aconventional mortgage product.

In addition the initial purchase is relieved from stamp duty land tax if the vendor is theindividual or a financial institution which already held the property under the above typeof arrangements with the individual. This means that the stamp duty land tax consequencesare the same as for a conventional re-mortgage.