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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Reliefs: Exercise of collective rights by tenants of flats

General overview FA03/S74

This relief is available where leaseholders of flats act together to exercise a statutory right to purchase the freehold of the block.

In these cases the freehold is acquired in a single transaction by a nominee or appointee (which may be one or more individuals or a company) acting on behalf of the leaseholders.

The relief acts to determine the rate of tax chargeable by dividing the total consideration given for the freehold by the number of flats leased by tenants who are participating in the exercise of the right. The rate of tax appropriate to that proportion of the consideration is then applied to the total consideration for the transaction.

This brings the rate of tax more in line with that which would have applied if the leaseholders had been able to purchase their shares of the freehold separately.


A nominee acting on behalf of the lessees of eight out of ten flats in a block, one of whom leases two flats, purchases the freehold of the block for £600,000. The rate of tax applicable to this transaction without relief would be 4% as the consideration exceeds £500,000.

As the statutory right is being exercised by the lessees of eight flats, the £600,000 consideration is divided by eight (£75,000). The rate of tax is therefore 0% and no tax is payable.

The nominee or appointee must claim the relief in a land transaction return using relief code 25.

This relief can be claimed only where the effective date of the transaction is on or after 22 April 2009. Before that date the relief applies only to purchases undertaken by a statutory “right to enfranchise” or RTE company. Section 4A Leasehold Reform, Housing & Urban Development Act 1993, which provided for RTE companies, was not brought into force.