Stamp duty on rent to mortgage transactions: which price counts?
At a glance
A qualifying rent-to-mortgage transaction uses a special SDLT price rule. The relevant amount is the price worked out through the linked right-to-buy legislation, not automatically the usual amount shown in the property deal.
- Check the exact statutory housing right.
- Obtain the Housing Act price calculation.
- Do not treat a scheme name as conclusive.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on rent to mortgage transactions: which price counts?
Stamp duty on rent to mortgage transactions: which price counts?
Rent-to-mortgage transactions use a special SDLT price. The usual amount-paid rules do not begin here. Instead, the right-to-buy calculation determines the price. This can matter where paperwork shows several amounts or terms.
What this rule is about
Schedule 9 contains the special SDLT rules. It is in the Finance Act 2003. They concern certain housing arrangements. Paragraph 6 covers rent-to-mortgage transactions and rent-to-loan transactions.
Its purpose is narrow but important. It identifies the amount that counts when SDLT is worked out. Not every purchase described as rent to mortgage receives special treatment.
The statutory scheme being used is what matters. A leaflet name or a housing provider’s internal label is not enough.
What the official source says
HMRC’s manual says that paragraph 6, rather than the normal consideration rules in Schedule 4, determines the amount used for these transactions. Two defined types of transaction receive that special rule.
- A rent-to-mortgage transaction can be a transfer of a home to a person.
- Alternatively, it can involve the grant of a lease of a home to that person.
- In either case, the person must be using the right to acquire on rent-to-mortgage terms under Part 5 of the Housing Act 1985.
- The amount counted for SDLT is the price that would be payable under the right-to-buy calculation in Housing Act 1985 section 126.
- For a transfer, that is the price for the transfer.
- For a lease, that is the price for the grant of the lease.
Paragraph 6 also defines a rent-to-loan transaction. It concerns the exercise of a right to buy a house through the rent-to-loan scheme in Part 3 of the Housing (Scotland) Act 1987.
For that type of transaction, the relevant price is the amount that would be payable under section 62 of that Act. In statutory wording, “heritable disposition” means a Scottish form of property transfer.
What this means in practice
If paragraph 6 applies, and the transaction is a transfer or lease made by exercising the specified statutory right, use the price produced by the linked Housing Act rule rather than simply copying any cash figure shown elsewhere in the deal into the SDLT calculation. That figure controls.
This does not make the transaction tax-free. Paragraph 6 changes the figure used for SDLT. It specifies neither an SDLT rate nor a tax result or separate exemption.
- Ask the housing body for the calculation used for the statutory scheme.
- Check whether your documents say you are exercising the specified statutory right.
- Match the calculation to the type of transaction: transfer or lease.
- Keep the offer letter, calculation and signed property documents together.
The source also refers to rent to loan in Scotland. However, SDLT applies to interests in land in England and Northern Ireland.
Schedule 9 still contains this definition. Current Scottish purchases remain outside SDLT.
How to analyse it
Follow the facts in order. That label alone proves nothing. Paragraph 6 may not apply.
- Identify where the property is located.
- Identify whether there is a transfer or a lease grant.
- Read the scheme documents to find the legal right being exercised.
- Confirm that the right is the rent-to-mortgage right under Part 5 of the Housing Act 1985.
- Obtain the price worked out under Housing Act 1985 section 126.
- Use that figure as the special SDLT amount under Schedule 9 paragraph 6.
- Then apply the SDLT rules that apply to the transaction date.
If the paperwork instead concerns shared ownership, right to buy, or another housing scheme, a different part of Schedule 9 may be relevant. Do not stretch paragraph 6 to cover a similar-looking arrangement.
Example
Amira is offered a lease of her home through a rent-to-mortgage right. Her papers include rent terms. They include a lease premium. They also include a calculation made under Housing Act 1985 section 126.
Section 126 sets the lease price. The special rule does not tell us how that Housing Act figure is calculated, so the underlying calculation must be retained and checked.
If Amira is using a private scheme that calls itself “rent to mortgage”, but she is not exercising the Part 5 statutory right, paragraph 6 does not establish the special method. The label is insufficient.
Why this can be difficult in practice
Because the rule directs you beyond SDLT legislation, you must identify the property transaction involved and the exact housing right on which it depends before deciding whether paragraph 6 applies. The label alone is not enough.
The special price may differ from the amounts shown throughout the offer documents. The source does not explain the detailed Housing Act calculation, so it is unsafe to guess it from a headline purchase price.
- A scheme’s marketing name may not describe its legal basis.
- Lease documents can contain rent and other payments as well as a stated price.
- The statutory calculation may sit in housing-provider papers rather than the conveyancing file.
- The Scottish rent-to-loan wording needs care because SDLT does not now cover Scottish land.
Key takeaways
- Rent-to-mortgage transactions have a special SDLT price rule.
- The special rule only applies when the required statutory housing right is exercised.
- Check the linked Housing Act calculation rather than relying on a scheme label.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 9 para 6 — sets the special SDLT amount for these schemes
- FA 2003 section 48 — limits SDLT land interests to England and Northern Ireland
- an Act of 1985 we do not have an identifier for section 126 — calculates the assumed right-to-buy price (no link: an Act of 1985 we do not have an identifier for)
- an Act of 1987 we do not have an identifier for section 62 — calculates the assumed rent-to-loan purchase price (no link: an Act of 1987 we do not have an identifier for)
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The supplied material does not explain the detailed calculation under Housing Act 1985 section 126 or Housing (Scotland) Act 1987 section 62.
- Whether a person is exercising the required statutory right depends on the scheme documents and the relevant housing legislation.
- The supplied Finance Act text is current only to 17 November 2025. Current primary legislation should be checked for a later transaction.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The transfer or lease document
- The housing body’s offer and scheme paperwork
- Evidence of the statutory right being exercised
- The calculation of the assumed right-to-buy or rent-to-loan price
- The transaction date and location of the property
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty on rent to mortgage transactions: which price counts? [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 9 para 6 - sets the special SDLT amount for these schemes https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/6/2025-11-17 - FA 2003 section 48 - limits SDLT land interests to England and Northern Ireland https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - an Act of 1985 we do not have an identifier for section 126 - calculates the assumed right-to-buy price - an Act of 1987 we do not have an identifier for section 62 - calculates the assumed rent-to-loan purchase price HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm27070 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The supplied material does not explain the detailed calculation under Housing Act 1985 section 126 or Housing (Scotland) Act 1987 section 62. - Whether a person is exercising the required statutory right depends on the scheme documents and the relevant housing legislation. - The supplied Finance Act text is current only to 17 November 2025. Current primary legislation should be checked for a later transaction. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty on rent to mortgage transactions: which price counts?
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