Stamp duty and alternative property finance: purchase and resale relief
Alternative property finance and SDLT
A finance firm buying a property and selling it to you can create two transfers. Section 73 may prevent an extra stamp duty charge, but only where its detailed conditions are met.
- The resale relief depends on the firm’s SDLT compliance for its purchase.
- The first purchase has a separate and limited exemption.
- The contracts and order of transfers are crucial.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty and alternative property finance: purchase and resale relief
Stamp duty and alternative property finance: purchase and resale relief
Some alternative finance deals involve a bank or other finance firm buying a property, then selling it to you. That creates two property transfers. Without relief, stamp duty could arise twice. Section 73 aims to prevent that result where its conditions are met.
What this rule is about
A normal mortgage usually involves one property purchase. You buy the home and borrow money from the lender. Some alternative property finance uses a different route: the finance firm buys first, then sells to you.
Two transfers do not automatically mean two stamp duty bills. The law gives a possible exemption for the transfer from the finance firm to you. But the structure and paperwork matter.
What the official source says
HMRC’s internal manual says the combined reliefs are intended to leave the stamp duty result in line with a purchase using a conventional mortgage. It says the second transfer, from the finance firm to the person, receives full relief.
The legislation is more detailed. The exemption on the resale only applies if the finance firm has complied with the SDLT rules for its own purchase.
- The finance firm must first buy an interest in land.
- It must then sell that same interest to you.
- You must grant the firm a legal mortgage over that interest.
- The firm must comply with the SDLT rules for its first purchase.
- This includes paying any SDLT due on that first purchase.
What this means in practice
The key point is simple: relief on the sale to you is not a free-standing promise. It depends on what happened when the finance firm bought the property.
You might assume every first purchase is exempt too. It is not. Section 73 only exempts that first step in limited cases.
- A first purchase may be exempt where you sold the property to the finance firm.
- It may also be exempt where another qualifying finance firm sold it.
- A purchase from an ordinary third-party seller is not listed in that exemption.
- The finance firm should deal properly with SDLT on its own transfer.
How to analyse it
Start with the transfers, not the product name. Calling a deal “Islamic finance” or “alternative finance” does not settle the stamp duty result.
- List every transfer of the property in date order.
- Identify who sold to the finance firm first.
- Check whether the firm later sold the same property interest to you.
- Check that you granted the required legal mortgage.
- Check the SDLT treatment, return and payment for the first transfer.
- Match the documents to the legal conditions in section 73.
Example
Amir owns a flat worth £300,000. A finance firm buys it from Amir, then sells it back to him as part of a qualifying finance arrangement. Amir grants the firm a legal mortgage over the flat. If the statutory conditions are met, the firm’s purchase from Amir can qualify for the first exemption, and its sale back to Amir can qualify for the second exemption.
Change one fact and the answer may differ. If the firm instead buys the flat from an unrelated seller, the first exemption is not automatically available under section 73.
Why this can be difficult in practice
This is the part people get wrong: the relief follows a defined legal arrangement, not simply a finance firm’s involvement. A small difference in who sold the property first can change the result.
- Contracts may describe the deal in commercial rather than legal terms.
- The property sold on must be the interest bought by the firm.
- A loan security document may not meet the required legal form.
- Errors in the firm’s SDLT treatment can affect relief on the resale.
Key takeaways
- Alternative finance can involve two property transfers.
- The resale to you may be exempt from stamp duty.
- Check the first transfer and the legal mortgage carefully.
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 section 73 — arrangements involving purchase, resale and legal mortgage; when the institution’s first purchase is exempt; conditions for exemption on the resale; meaning of legal mortgage in each jurisdiction
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 short HMRC manual page does not explain how section 73 applies to every alternative finance product.
- Whether the first purchase is exempt may depend on who sold the property to the financial institution and whether earlier arrangements were involved.
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 signed finance and property contracts
- Details of each transfer and the parties involved
- Evidence of the legal mortgage granted to the institution
- The SDLT return and payment position for the institution’s purchase
- The transaction’s effective date
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 and alternative property finance: purchase and resale relief [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 section 73 - arrangements involving purchase, resale and legal mortgage https://www.legislation.gov.uk/ukpga/2003/14/section/73/2025-11-17 - FA 2003 section 73 - when the institution's first purchase is exempt https://www.legislation.gov.uk/ukpga/2003/14/section/73/2025-11-17 - FA 2003 section 73 - conditions for exemption on the resale https://www.legislation.gov.uk/ukpga/2003/14/section/73/2025-11-17 - FA 2003 section 73 - meaning of legal mortgage in each jurisdiction https://www.legislation.gov.uk/ukpga/2003/14/section/73/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm28400 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 short HMRC manual page does not explain how section 73 applies to every alternative finance product. - Whether the first purchase is exempt may depend on who sold the property to the financial institution and whether earlier arrangements were involved. 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 and alternative property finance: purchase and resale relief
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