Stamp Duty Land Tax Relief for House-Builders Acquiring Property from Individuals

SDLT relief on a house-builder’s purchase of an old home in part exchange

SDLT relief may apply where a house-builder buys a person’s existing home as part of the deal for that person to buy a new-build home from the same builder. The relief applies to the builder’s purchase of the old home, not the buyer’s purchase of the new one. Full relief is available if strict conditions are met, and partial relief may still apply if the land transferred with the old home is larger than the permitted area.

• The old home must be bought by a house-building company, or a company connected with one, from an individual who lived there as their only or main residence at some point in the previous two years.
• The individual must buy a new dwelling from the house-builder and intend to use it as their only or main residence.
• The two transactions must be genuinely linked, with each one entered into as consideration for the other as part of a true part-exchange arrangement.
• If the land transferred with the old home does not exceed the permitted area, the builder’s purchase can be exempt from SDLT.
• If the land exceeds the permitted area, relief may still be available in part, with SDLT charged on the excess value based on a market value comparison.
• In practice, the main issues are proving main residence status, showing the transactions are properly linked, and valuing any extra land included in the transfer.

Scroll down for the full analysis.

SDLT relief where a house-builder takes your old home in part exchange

This relief can apply when a house-building company buys a person’s existing home as part of a deal for that person to buy a new home from the builder. If the conditions are met, the builder’s purchase of the old home can be exempt from SDLT. If the land transferred with the old home is larger than the permitted limit, only partial relief may be available.

What this rule is about

The rule deals with a common part-exchange arrangement. A person wants to buy a newly built dwelling from a house-builder. To help the sale proceed, the builder agrees to buy that person’s current home. Schedule 6A paragraph 1 Finance Act 2003 provides relief for the builder’s acquisition of the old dwelling in certain cases.

The focus is on the builder’s purchase of the old dwelling, not the individual’s purchase of the new one. The relief is intended for transactions that are genuinely linked: the old home is taken by the builder as part of the individual moving into a new main residence sold by that builder.

What the official source says

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

• a house-building company, or a company connected with a house-building company, buys a dwelling from an individual, whether alone or jointly with other individuals;
• the individual occupied that old dwelling as their only or main residence at some point in the two years ending on the date of the builder’s acquisition;
• the individual acquires a new dwelling from the house-building company;
• the individual intends to occupy the new dwelling as their only or main residence;
• each acquisition is entered into in consideration of the other; and
• the land acquired by the house-building company does not exceed the permitted area.

If the land acquired by the builder exceeds the permitted area, HMRC says partial relief may still be available, provided the other conditions are met. In that case, part of the consideration remains chargeable. The chargeable amount is the difference between:

• the market value of the permitted area, meaning the old dwelling and the amount of surrounding land that qualifies; and
• the total market value of the old dwelling including all the land transferred.

The manual also points readers to SDLTM21010 for the definitions of the criteria, including points such as “house-building company”, “connected”, and “permitted area”.

What this means in practice

In practical terms, this relief is aimed at a builder taking a buyer’s existing home in part exchange for a new-build home. If the statutory conditions are satisfied, the builder may not have to pay SDLT on acquiring the old home.

The main practical questions are usually:

• Was the old property really the individual’s main or only residence within the relevant two-year period?
• Is the new property being bought from the house-builder, and is it intended to become the individual’s new main residence?
• Are the two transactions genuinely linked, so that each is entered into in consideration of the other?
• How much land is included with the old dwelling, and does it stay within the permitted area?

If too much land is included, the relief is not necessarily lost altogether. Instead, the excess value may be brought into charge through partial relief. That means the land position can directly affect how much SDLT is payable.

This matters in conveyancing because the structure of the deal, the contract terms, and the description of the land being transferred may all affect whether full relief, partial relief, or no relief is available.

How to analyse it

A sensible way to analyse the relief is to work through the conditions in order.

• Identify the buyer of the old dwelling. It must be a house-building company or a company connected with one.
• Identify the seller. The old dwelling must be bought from an individual, either alone or jointly with other individuals.
• Check occupation of the old dwelling. The individual must have occupied it as their only or main residence at some time in the two years ending with the builder’s acquisition date.
• Check the new dwelling transaction. The individual must acquire a new dwelling from the house-building company.
• Check intention for the new dwelling. The individual must intend to occupy the new dwelling as their only or main residence.
• Check the link between the transactions. Each acquisition must be entered into in consideration of the other. This points to a true part-exchange arrangement rather than two unrelated sales.
• Check the extent of the land. If the land transferred with the old dwelling exceeds the permitted area, consider whether partial relief applies rather than full exemption.

Where partial relief is in point, the valuation exercise becomes important. The calculation depends on market value, so the parties need to identify:

• the market value of the qualifying permitted area; and
• the market value of the whole property as transferred, including all land.

HMRC’s manual states that the chargeable consideration is the difference between those two values.

Example

Illustration: A buyer agrees to purchase a newly built house from a developer. As part of the same arrangement, the developer buys the buyer’s existing home. The buyer lived in that old home as their main residence within the last two years, and intends to live in the new-build as their new main residence. The contracts are linked so that each transaction is part of the bargain for the other.

If the old home is transferred with no more than the permitted area of land, the developer’s purchase of the old home may be exempt from SDLT under this relief.

If the old home includes more land than the permitted area, the relief may still apply in part. In that case, SDLT may be charged by reference to the excess value attributable to the land outside the permitted area, using the market value comparison described by HMRC.

Why this can be difficult in practice

The rule looks straightforward, but several parts can be fact-sensitive.

First, “main or only residence” is not always obvious if the individual has more than one home, has moved out shortly before the transaction, or has mixed personal and other use. The manual page provided here does not set out the full test, so the wider definitions matter.

Second, the requirement that each acquisition is entered into in consideration of the other can raise drafting and evidential issues. In a genuine part-exchange, the transactions are commercially and legally linked. If they are arranged as separate deals without that connection, the relief may be harder to establish.

Third, land area can be a major issue. A property may include gardens, paddocks, outbuildings, or extra land that takes it beyond the permitted area. The source makes clear that this does not automatically destroy relief, but it does turn the case into a partial-relief and valuation question.

Fourth, the calculation for partial relief depends on market value. That can create room for disagreement, especially where the extra land has development potential or a value that is not obvious from residential use alone.

Finally, this HMRC page is a manual entry, not the legislation itself. It summarises the statutory rule and points to another page for definitions. In practice, the detailed meaning of terms such as “permitted area” and “connected” must be checked against the legislation and the linked guidance.

Key takeaways

• This relief applies to the builder’s purchase of the old home in a genuine part-exchange arrangement for a new dwelling.
• Full relief depends on linked transactions, residence conditions, and the land staying within the permitted area.
• If too much land is included, partial relief may still be available, but a market value calculation is needed.

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 House-Builders Acquiring Property from Individuals

View all HMRC SDLT Guidance Pages Here