Stamp Duty Land Tax Relief for Property Traders Acquiring Old Dwellings

SDLT relief for property traders in new-build part-exchange deals

This SDLT relief can apply when a property trader buys an individual’s old home to help that person move into a new-build bought from a house-building company. If all conditions are met, the trader may get full relief from SDLT, or partial relief if the land is larger than the permitted area. The relief is narrow, depends on specific residence and business conditions, and can be withdrawn if the trader later uses the property in a disqualifying way.

• The relief only applies where a property trader buys an old home from an individual who is buying a new dwelling from a house-building company and intends to live in it as their main home.
• The old home must have been the individual’s only or main residence at some point in the two years before the trader buys it.
• If the land transferred is within the permitted area, full SDLT relief may be available; if it exceeds that area, partial relief may still apply using a market value comparison.
• The trader must be carrying on a business that includes buying existing homes from people moving into new-build homes from house-builders.
• The relief can be withdrawn if the trader refurbishes the property beyond the permitted amount, lets it out, or allows occupation by connected persons such as employees or principals.
• A short lease or licence back to the seller for up to six months does not by itself block the relief, and HMRC says SDLT relief code 28 should be used on the return.

Scroll down for the full analysis.

SDLT relief when a property trader buys an old home from someone moving into a new-build

This page explains a specific Stamp Duty Land Tax relief for property traders. It can apply where a trader buys a person’s existing home as part of that person’s move into a new dwelling bought from a house-building company. The relief can remove the SDLT charge in full, or reduce it if too much land is included. It is a targeted relief with detailed conditions, and it can later be withdrawn if the trader uses the property in certain ways.

What this rule is about

The rule is aimed at a common commercial arrangement in the new-build market. A buyer wants to purchase a newly built home from a house-building company, but still owns their current home. A property trader steps in and buys that current home to help the buyer complete the move.

Without relief, that purchase by the trader could attract SDLT in the normal way. This provision gives relief if the transaction fits the statutory conditions. The policy appears to be to support these part-exchange style arrangements, but only within defined limits.

What the official source says

HMRC’s manual says the purchase of the old dwelling by the property trader is exempt from SDLT if all of the following conditions are met:

• The buyer is a property trader.
• The trader buys the old dwelling from an individual, whether alone or jointly with other individuals.
• The purchase is made in the course of a business that consists of, or includes, acquiring dwellings from individuals who have acquired a new dwelling from a house-building company.
• The individual occupied the old dwelling as their only or main residence at some point in the two years before the acquisition date.
• The individual acquires a new dwelling from a house-building company.
• The individual intends to occupy the new dwelling as their only or main residence.
• The land acquired by the property trader does not exceed the permitted area.

If the land acquired is larger than the permitted area, the manual says partial relief may still be available if the other conditions are met. In that case, some of the consideration becomes chargeable. The chargeable amount is worked out by comparing:

• the market value of the old dwelling plus the permitted area, and
• the market value of the old dwelling including all the land acquired.

The relief can be withdrawn if the property trader:

• spends more than the permitted amount on refurbishment of the old dwelling,
• grants a lease or licence of the old dwelling, or
• allows any of its principals or employees, or anyone connected with them, to occupy the old dwelling.

The manual also states an important exception. Relief is not denied or withdrawn merely because the trader intends to grant, and does grant, a lease or licence back to the individual seller for no more than six months after the acquisition.

HMRC says the SDLT return should use relief code 28 for this relief.

What this means in practice

This relief is not a general exemption for all purchases by property traders. It applies only to a narrow type of transaction.

The key practical point is that the old home must be linked to the individual’s acquisition of a new dwelling from a house-building company. If a trader simply buys a home from an individual in the ordinary course of business, this relief does not apply unless the statutory pattern is present.

The residence conditions matter as well. The old dwelling must have been the individual’s main or only residence at some point in the two years before the trader acquires it. The new dwelling must also be intended as that person’s new main or only residence. This shows that the relief is directed at genuine home-movers, not purely investment or trading arrangements.

Land area is another practical issue. If the old home comes with land exceeding the permitted area, relief is not necessarily lost altogether. Instead, only part of the price may be taxed. That means valuing the property on two bases: first with only the permitted area, and second with all the land actually acquired.

The relief also comes with ongoing conditions after completion. If the trader refurbishes too extensively, lets the property, or allows occupation by people connected with the trader’s business, the relief can be withdrawn. So the SDLT position may depend not just on the purchase itself, but on what the trader does afterwards.

How to analyse it

A sensible way to analyse the relief is to work through these questions in order:

• Is the buyer a property trader for the purposes of this relief?
• Is the seller an individual, either alone or with other individuals?
• Is the purchase part of a business that includes buying existing homes from people who are acquiring new dwellings from a house-building company?
• Did the individual occupy the old dwelling as their main or only residence at some time in the two years before the acquisition date?
• Is the individual acquiring a new dwelling from a house-building company?
• Did the individual intend the new dwelling to be their only or main residence?
• Does the land transferred stay within the permitted area, or is a partial relief calculation needed?
• After completion, will the trader avoid actions that could withdraw the relief?

Some of these questions rely on statutory definitions not set out in the extract, including the meanings of terms such as property trader, permitted area and permitted amount. HMRC’s manual cross-refers to another page for those definitions, so those terms need to be checked carefully rather than assumed.

Where the land is larger than the permitted area, the valuation exercise is central. The legislation does not simply tax the “extra land” by acreage. Instead, the chargeable consideration depends on market value comparisons. That can make the result sensitive to valuation evidence.

Example

Illustration: A house-building company sells a new home to Ms A. To help her move, a property trader buys her existing house. Ms A lived in that old house as her main residence within the previous two years and intends to live in the new-build as her main residence. If the trader’s business includes these kinds of acquisitions, and the land transferred with the old house does not exceed the permitted area, the purchase of the old house may qualify for full SDLT relief.

If instead the old house includes land beyond the permitted area, the trader may still get partial relief. In that case, SDLT is charged only on the portion of consideration calculated by reference to the excess value attributable to the larger site.

If, after buying the old house, the trader grants a tenancy to a third party or allows an employee to live there, the relief may be withdrawn. But if the trader simply allows Ms A to remain temporarily under a lease or licence for no more than six months, that does not by itself make the relief unavailable or withdrawn.

Why this can be difficult in practice

The rule looks straightforward at first, but several parts are fact-sensitive.

First, the transaction must be part of the right kind of business activity. It is not enough that the buyer trades in property generally. The acquisition must fall within a business that consists of, or includes, buying dwellings from individuals who are acquiring new dwellings from house-building companies.

Second, residence questions can be awkward. Whether the old dwelling was the individual’s main or only residence, and whether they intended the new dwelling to become their main or only residence, may depend on evidence and surrounding facts.

Third, the land limit can create valuation disputes. Partial relief depends on market values, not just on identifying that there is “too much land”. If the property has substantial grounds, paddocks, gardens or mixed-use features, the valuation exercise may be less obvious than it sounds.

Fourth, relief can be lost after the purchase. That means the trader must monitor what happens to the property after completion. A transaction that qualified at the start may cease to qualify if the trader later refurbishes beyond the permitted amount or allows occupation in a prohibited way.

Finally, the extract refers to defined terms explained elsewhere. The legal outcome may turn on those definitions, so they should be checked directly rather than inferred from ordinary language.

Key takeaways

• This is a narrow SDLT relief for a property trader buying an individual’s old home when that individual is buying a new dwelling from a house-building company.
• Full relief depends on meeting all the statutory conditions, including residence conditions and the permitted area limit.
• Even if the land exceeds the permitted area, partial relief may still be available, but the calculation depends on market value and the relief can later be withdrawn if the trader uses the property in disqualifying ways.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Stamp Duty Land Tax Relief for Property Traders Acquiring Old Dwellings

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