Stamp duty relief for flats with long leases: HMRC’s Example 3
The short answer
HMRC says that buying a block’s freehold reversion does not qualify for the multiple homes relief where every flat is already under a 999-year headlease.
- The interest bought is crucial.
- Long leases can exclude the freehold from the test.
- The relief’s availability is date-sensitive.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty relief for flats with long leases: HMRC’s Example 3
Stamp duty relief for flats with long leases
Buying the freehold behind a block of flats does not always count as buying the flats for stamp duty relief. In HMRC’s example, no relief is due because every flat is already subject to a 999-year headlease. The interest you buy matters.
What this rule is about
This example examines relief for buying more than one home at once where ownership is layered, as it often is in blocks of flats. That layering matters.
The freehold reversion is what the freeholder retains while a long lease is in force. A headlease sits between the freehold and the individual flat leases.
That distinction sounds technical. It can decide whether the relief is available.
What the official source says
HMRC’s manual considers a block of 20 flats. A company controlled by the tenants holds a 999-year headlease over the whole block. Ten flats have 99-year leases, while the other flats have leases of 21 years or less.
- The buyer purchases the freehold reversion.
- Every flat is subject to the 999-year headlease.
- A lease granted for more than 21 years triggers the special long-lease rule.
- The freehold above that lease is ignored for this relief test.
- HMRC therefore says the freehold purchase is not a relevant transaction.
- On HMRC’s view, no relief is due.
What this means in practice
Counting flats alone cannot decide this point. Instead, identify precisely what the buyer receives on completion, which leases already affect that interest, and how those leases bear on the relief test before reaching a conclusion.
Here, the buyer gets the freehold but not the headlease. The 999-year headlease covers all 20 flats. So the freehold sits above a long lease in every case.
- Check the title plan and transfer, not just the sales details.
- Ask who owns the headlease on completion day.
- Check each lease’s original length.
- Do not assume the freehold gives relief because a block contains many homes.
How to analyse it
Begin with the legal interest being transferred. Then work down through the leases below it. The key question is simple: is the buyer taking an interest above a lease that began for more than 21 years?
- Identify the freehold, headlease and flat leases.
- Confirm which one the buyer is actually buying.
- Record the initial term of each lease.
- Apply the long-lease rule to any interest above it.
- Work out which flats, if any, remain for the relief test.
- Check the transaction date before treating the relief as available.
Example
In HMRC’s example, Priya buys the freehold reversion of a 20-flat block. A tenants’ company already holds a 999-year headlease over all 20 flats. Even though ten flats have shorter leases of 21 years or less, Priya has bought only the interest above the 999-year lease. HMRC says the relief does not apply.
Change one fact: if Priya bought the headlease instead, HMRC says the deal would be relevant for the ten flats with leases of 21 years or less.
Why this can be difficult in practice
Lease structures may be described loosely, but analysing them accurately can be hard. When a sales pack describes a purchase as a “freehold block”, it may still leave unclear which leasehold interests remain, who owns them, and what passes on completion. The label alone is insufficient.
- A long lease can hide the flats from the freeholder’s relief test.
- The length left on a lease is not necessarily its original term.
- The result may differ if the buyer takes the headlease rather than the freehold.
- This HMRC example does not settle whether relief exists for every transaction date.
Key takeaways
- Count the interest bought, not just the flats in the block.
- A superior interest above a lease over 21 years may be ignored.
- Check the transaction date and lease documents before relying on relief.
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 that could qualify for multiple homes relief; long leases that exclude superior interests from relief
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 establish whether the historical multiple dwellings relief was available for a particular transaction date. A current or date-specific primary-law check is needed before relying on the example for a live purchase.
- The example does not address tax rates, the amount paid, linked transactions, or any other possible SDLT rules.
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 and transfer showing whether the buyer takes the freehold reversion or the headlease.
- Copies of the headlease and each flat lease, including their original terms.
- The effective date of the transaction.
- Details of any other property or linked deals that form part of the purchase.
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 relief for flats with long leases: HMRC’s Example 3 [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 that could qualify for multiple homes relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 Schedule 6B para 2 - long leases that exclude superior interests from relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/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/sdltm29973 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 establish whether the historical multiple dwellings relief was available for a particular transaction date. A current or date-specific primary-law check is needed before relying on the example for a live purchase. - The example does not address tax rates, the amount paid, linked transactions, or any other possible SDLT rules. 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 relief for flats with long leases: HMRC’s Example 3
Search Land Tax Advice with Google
