Stamp duty on a block of flats: HMRC’s long-lease example
In short
HMRC’s example splits a block purchase between empty flats and flats held on 99-year leases. Only the empty flats are used for its average-price relief calculation.
- Five empty flats receive £1.25 million of the price.
- The average for those flats is £250,000.
- The long-lease flats are treated differently.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on a block of flats with long leases
Buying a whole block does not always mean one simple stamp duty calculation. HMRC divides its example’s price between five empty flats and five flats already let on 99-year leases. That division changes how the tax is worked out.
What this rule is about
This relief covers buying several homes together. Its basic idea is to work out tax by looking at an average price per qualifying home, rather than putting the whole price through the residential tax bands at once.
A long lease changes the relief calculation. This applies despite freehold ownership. HMRC therefore treats the ten flats differently.
What the official source says
HMRC examines a £1.4 million freehold purchase. It covers ten flats. Five flats are empty. Five others are let on 99-year leases. There is no lease above the whole block.
- HMRC treats the five empty flats as the homes relevant to the relief calculation.
- It treats the freehold as separate interests in the individual flats.
- It allocates £1.25 million of the price to the five empty flats.
- It allocates the remaining £150,000 to the five flats with long leases.
- For the empty flats, it divides £1.25 million by five before working out tax.
- It then multiplies that tax figure by five.
- For the long-lease flats, HMRC says the rate is set by the full £1.4 million price.
HMRC also says that the higher stamp duty rate for extra homes applies in its example. It says a non-UK-resident rate may also apply where a buyer is not UK resident.
That is HMRC’s guidance, not the law itself. On the available facts, the manual does not give enough detail to check the higher-rate conclusion independently.
What this means in practice
The key distinction is between an empty flat and a flat where the buyer gets only the freehold above a long lease. Where a lease was originally granted for more than 21 years, the law excludes the superior interest above it when deciding whether the relief applies, even if the buyer acquires the freehold. That exclusion matters.
So you cannot simply count every flat in the building. You need to identify exactly what interest you are buying in each one.
- Check whether each flat is empty, occupied, or let.
- Read every lease rather than relying on a sales summary.
- Check the lease’s original term, not just its remaining term.
- Split the total price on a fair and reasonable basis.
- Keep evidence that explains the split.
How to analyse it
Start with the legal interests, then move to the numbers. Counting front doors is not enough.
- List every flat included in the purchase.
- Identify the interest being bought in each flat.
- Check whether a long lease means the freehold interest must be ignored for the relief test.
- Work out which homes remain in the relief calculation.
- Allocate the price between those homes and the remaining interests fairly.
- Average the price allocated to the qualifying homes.
- Work out tax on that average, then multiply by the number of qualifying homes.
- Calculate the remaining part using the rules that apply to the whole transfer.
- Test separately whether a higher or non-resident rate applies.
Example
HMRC’s figures make the first part clear. Of the £1.4 million total, the five empty flats receive £1.25 million. Divide £1.25 million by five and the average is £250,000 per flat. Tax is worked out using that £250,000 figure, then multiplied by five.
For the five flats with 99-year leases, the remaining £150,000 applies. HMRC does not treat that as a separate £150,000 purchase for setting the rate. Instead, its example says the rate is set by the full £1.4 million price.
The source does not give a transaction date. It would therefore be unsafe to put a final tax figure on this example, because tax tables and relief availability can depend on timing.
Why this can be difficult in practice
You might think that ten flats means ten homes for every stamp duty purpose. It does not. A long lease changes the relief calculation. This remains true even though the buyer owns the freehold.
Price allocation matters too. When allocating price between qualifying empty flats and the remaining long-lease interests, the total must be split on a fair and reasonable basis, with evidence supporting the figures used. The split matters. Moving more of the price to one group of flats can change the result.
- A lease may be described wrongly or incompletely in sales papers.
- The original lease term can matter more than its current remaining term.
- The value of empty flats may differ sharply from flats with sitting tenants.
- The higher rate needs a separate statutory test.
- The buyer’s UK residence can affect the result.
- This old-style worked example cannot replace a date-specific calculation.
Key takeaways
- Count the interests bought, not just the flats in the block.
- Long leases can exclude freehold interests from the relief test.
- A fair split of the total price is central to the calculation.
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 6B para 2 — transactions involving interests in two or more homes; long lease superior interests ignored for the relief test
- FA 2003 Schedule 6B para 4 — separate tax calculations for homes and remaining property; fair and reasonable basis for splitting the price
- FA 2003 Schedule 6B para 5 — average-price calculation for the homes part; proportionate tax calculation for the remaining price
- FA 2003 section 55 — standard stamp duty tables for residential and other property
- FA 2003 section 116 — six or more homes treated as non-residential property
- FA 2003 Schedule 4ZA para 1 — higher stamp duty rate table for qualifying purchases
- FA 2003 Schedule 4ZA para 2 — higher-rate tests for multiple-home individual and company purchases
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 source does not state the transaction date, so it cannot safely be used to confirm the relief’s availability or the tax rates for a live purchase.
- The source does not explain why the higher rate applies in its example. The statutory answer depends on whether the buyer is an individual or a company and on further facts.
- The source gives no valuation evidence for the £1.25 million and £150,000 split.
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 contract, completion date and SDLT effective date
- The freehold and leasehold title documents
- Details of each flat lease, including its original and remaining term
- A valuation or other support for the price split between flats
- The identity and tax-residence status of every buyer
- Details needed to test any higher stamp duty rate
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 a block of flats: HMRC's long-lease example [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 6B para 2 - transactions involving interests in two or more homes https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 Schedule 6B para 2 - long lease superior interests ignored for the relief test https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 Schedule 6B para 4 - separate tax calculations for homes and remaining property https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/4/2025-11-17 - FA 2003 Schedule 6B para 4 - fair and reasonable basis for splitting the price https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/4/2025-11-17 - FA 2003 Schedule 6B para 5 - average-price calculation for the homes part https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/5/2025-11-17 - FA 2003 Schedule 6B para 5 - proportionate tax calculation for the remaining price https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/5/2025-11-17 - FA 2003 section 55 - standard stamp duty tables for residential and other property https://www.legislation.gov.uk/ukpga/2003/14/section/55/2025-11-17 - FA 2003 section 116 - six or more homes treated as non-residential property https://www.legislation.gov.uk/ukpga/2003/14/section/116/2025-11-17 - FA 2003 Schedule 4ZA para 1 - higher stamp duty rate table for qualifying purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/1/2025-11-17 - FA 2003 Schedule 4ZA para 2 - higher-rate tests for multiple-home individual and company purchases https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA/paragraph/2/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm29971 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 source does not state the transaction date, so it cannot safely be used to confirm the relief's availability or the tax rates for a live purchase. - The source does not explain why the higher rate applies in its example. The statutory answer depends on whether the buyer is an individual or a company and on further facts. - The source gives no valuation evidence for the £1.25 million and £150,000 split. 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 a block of flats: HMRC’s long-lease example
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