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HMRC SDLT: Understanding SDLT Charges on Different Types of Student Accommodation

Understanding SDLT and Student Accommodation

When it comes to Stamp Duty Land Tax (SDLT) and student accommodation, things can get a bit complicated. The classification of what constitutes student accommodation depends on the type of building and its relationship with educational institutions. According to FA03/S116(6), references to a building can also apply to part of a building.

Types of Student Accommodation

Student accommodation can generally be divided into three main categories:

1. Student Halls of Residence

• These are buildings owned or managed by the educational institutions that the students attend.
• Commonly found on or near the campus, students can only live here if they are enrolled at that specific institution.
• These properties are classified under non-residential SDLT rates, which means they are not affected by Higher Rates for Additional Dwellings (HRAD) or Multiple Dwellings Relief (MDR). Note that MDR will no longer apply from 1 June 2024, according to SDLTM29901.

2. Student-Specific Residential Accommodation

• This includes properties owned by companies that cater exclusively to students but are not directly connected to the educational institutions.
• While these properties target students, there is still a requirement that all residents must be students, which should be demonstrated through planning restrictions.
• For these properties, residential SDLT rates apply, but the HRAD does not. MDR may still be applicable for transactions made before 1 June 2024.

3. General Residential Accommodation

• This category includes ordinary homes that may be rented by students, including Houses of Multiple Occupancy (HMOs) in areas close to colleges or universities.
• There is no requirement for the tenants to be students, which means these properties adhere to the same SDLT treatment as any standard residential property.
• For these kinds of properties, HRAD and/or MDR (for transactions prior to 1 June 2024) may also apply.

Criteria for Identification

Simply calling a building a student hall of residence does not automatically mean it falls under that category for SDLT purposes. Certain evidence must be provided:

• For a building to qualify as a student hall of residence (category 1), it must be shown that the accommodation is reserved for students and staff of a specific educational institution and that the institution is involved in housing its students.
• For category 2, documentation is needed to prove that the accommodation is limited to students, without a direct link to any educational institution.

It’s important to note that halls of residence are not considered dwellings for SDLT purposes, so MDR cannot be claimed, even before its withdrawal. However, if the accommodation is outside of the hall of residence classification, specifically falling into categories 2 or 3, then relief may apply if the accommodation meets the standard criteria of suitability for residential use as a single property.

Purchasing Multiple Dwellings

Before MDR was abolished, buyers had a choice to either claim MDR or follow FA03 S116(7), which considered the purchase of six or more dwellings in a single transaction as non-residential for SDLT purposes. With the abolishment of MDR, this choice is no longer available.

Essentially, if you buy six or more residential dwellings in one transaction, FA03 S116(7) will categorise the deal as non-residential, which affects how SDLT is calculated. For further examples and detailed information, see SDLTM00377A.

Conclusion

The classification of student accommodation for SDLT purposes hinges on various factors, including ownership and connections to educational institutions. Understanding the different categories and the associated SDLT implications is essential for anyone involved in property transactions linked to student housing.