Guide to Selecting Property Type Codes on SDLT Forms SDLT1, SDLT3,

Choosing the correct SDLT property type code

When completing SDLT1, SDLT3 or SDLT4, the property type code must match the legal nature of the whole transaction, not just the main building. The main choices are residential, mixed, non-residential, or residential subject to the additional properties rules, and the right code can affect both HMRC’s treatment and whether extra information is needed.

• Use code 01 if the transaction is wholly residential under Finance Act 2003 section 116, including a dwelling, its garden or grounds, and rights benefiting it.
• Use code 02 if the transaction is mixed, meaning it includes both residential and non-residential elements, whether in one deal or across linked transactions.
• Use code 03 if the whole transaction is non-residential; HMRC also says purchases of six or more separate dwellings should usually be shown as non-residential unless Multiple Dwellings Relief is claimed.
• Use code 04 for residential purchases caught by the additional properties rules, including where a buyer owns more than one dwelling after completion, buys a new main home before selling the old one, or is a company or other non-individual buying residential property.
• If filing a paper SDLT1 and the code is 02 or 03, SDLT4 must also be completed to explain the non-residential use, and lease returns must use a matching code at Question 16.
• In practice, you should review everything included in the deal, such as land, outbuildings, separate sites and rights, because a purchase that looks residential at first may need to be treated as mixed.

Scroll down for the full analysis.

How to choose the correct SDLT property type code on forms SDLT1, SDLT3 and SDLT4

This page explains how the “type of property” question on an SDLT return should be answered. It matters because the code chosen affects how HMRC treats the transaction and, in some cases, whether extra information must be given. The official guidance is brief and form-focused. The practical issue is to classify the transaction correctly as residential, mixed, non-residential, or residential subject to the additional properties rules.

What this rule is about

SDLT returns ask for a property type code. On paper forms, this appears at Question 1 on SDLT1, Question 1 on SDLT3, and Question 8 on SDLT4. The code must reflect the legal character of the property in the transaction.

This is not just an administrative label. The classification depends on the statutory meaning of “residential property” in Finance Act 2003 section 116. Broadly, residential property includes:

• a building used or suitable for use as a dwelling, or being constructed or adapted for use as a dwelling
• land forming part of the garden or grounds of that building, including structures on that land
• rights or interests over land that benefit a dwelling, such as access rights

If property does not fall within that definition, it is non-residential. Some transactions involve both residential and non-residential elements. Those are treated as mixed.

What the official source says

The manual says one of four codes must be used:

• 01: residential property
• 02: mixed, where only part of the property is residential
• 03: non-residential, where the whole property is not residential
• 04: residential – additional properties

For code 01, the transaction must be wholly residential within the section 116 definition.

For code 02, the transaction is mixed if only part of the property is residential. The same applies if there are linked transactions and, looking at them together, what is acquired is only partly residential.

For code 03, the whole property must be non-residential. The guidance also says that a transaction involving the transfer of a major interest in, or grant of a lease over, six or more separate dwellings should be shown as non-residential unless a claim to Multiple Dwellings Relief is made.

For code 04, the code applies where a purchase of residential property results in the purchaser owning more than one residential property. It also applies if the new property is intended as a replacement for the purchaser’s main residence but the old main residence has not yet been sold. In that situation, the code is still used even though a refund may later be available once the old main residence is sold. The guidance further says that a company or other non-individual must use this code when buying any residential property, even if it is the only residential property owned.

The manual also says the answer must be correct for the whole of the property in the transaction. That is particularly important where the transaction includes more than one building or more than one site.

If a paper SDLT1 is filed and the answer to Question 1 is 02 or 03, an SDLT4 must also be completed to describe the non-residential use or uses. If the return is filed online, the software should ask the follow-up questions.

For leases, Question 16 on SDLT1 uses separate codes:

• R for residential
• N for non-residential
• M for mixed

The code at Question 16 must match the property type selected at Question 1.

What this means in practice

The starting point is to look at everything included in the transaction, not just the main building. A purchase may look residential at first glance, but if it includes non-residential land or buildings, the correct return may be mixed instead.

Equally, the classification is not always decided building by building. The return must reflect the character of the transaction as a whole. If one contract covers a house, commercial land, farm buildings, or other non-residential elements, code 02 may be required even though there is clearly a dwelling in the package.

The manual gives a useful example: a farmhouse sold together with farm buildings, farmland and an agricultural worker’s cottage should be returned as mixed. The reason is that the subject matter is not wholly residential and not wholly non-residential.

The linked transactions point is also important. If separate purchases are linked and, taken together, what is acquired is only partly residential, the return should be treated as mixed for this purpose. So the analysis may require looking beyond the single contract being filed.

The special treatment of six or more dwellings is also practical rather than intuitive. Even though dwellings are residential in nature, the guidance says the transaction should be shown as non-residential unless Multiple Dwellings Relief is claimed. That means the form classification does not always follow ordinary language.

Code 04 is about residential purchases that fall within the additional properties rules. On the form, this is still a residential transaction, but it must be identified separately. The guidance makes clear that this includes:

• an individual buying a new main residence before selling the old one
• a company or other non-individual buying residential property

So code 04 is not limited to obvious buy-to-let or second home purchases.

How to analyse it

A sensible way to approach the question is:

1. Identify everything included in the transaction. Look at all land, buildings, outbuildings, rights, and any separate sites included in the contract.
2. Ask whether any part is residential within section 116. That includes a dwelling, its garden or grounds, and rights benefiting it.
3. Ask whether any part is non-residential. If yes, the transaction may be mixed rather than purely residential.
4. Check whether there are linked transactions. If there are, consider the combined position, not just the single acquisition in isolation.
5. If the transaction involves six or more separate dwellings, check whether the return should be shown as non-residential unless Multiple Dwellings Relief is being claimed.
6. If the transaction is residential, ask whether the additional properties code applies. In particular, consider whether the buyer will own more than one residential property after completion, or whether the buyer is a company or other non-individual.
7. If filing on paper and the result is mixed or non-residential, make sure SDLT4 is also completed.
8. If the transaction is a lease, ensure the lease property code at Question 16 matches the main property type classification.

Example

A buyer acquires a country house under one contract. The purchase includes the house, its gardens, a paddock used as part of the residential grounds, and a separate barn used for a trading business. Because the transaction includes both residential and non-residential elements, the correct classification is likely to be mixed rather than wholly residential.

By contrast, if a buyer acquires only a dwelling and land that forms part of its garden or grounds, with no non-residential element, the transaction would fall within residential property.

If an individual buys a new home before selling their old home, the guidance says code 04 should still be used. If the old main residence is then sold later, a refund may be possible, but that does not change the code used on the original return.

Why this can be difficult in practice

The hardest part is often deciding what exactly is included in the residential element. The statutory definition extends beyond the dwelling itself to gardens, grounds, and rights benefiting the dwelling. In some cases, that boundary is not obvious from the contract alone.

Another difficulty is that the form classification does not always mirror everyday language. A transaction involving six or more dwellings may need to be shown as non-residential for return purposes unless Multiple Dwellings Relief is claimed. That can surprise taxpayers who assume “dwellings” must always mean “residential” on the form.

Linked transactions can also change the answer. A purchase that appears residential on its own may need to be treated differently when linked acquisitions are considered together.

Finally, code 04 can be misunderstood. It is not simply a label for investors. The guidance says it must also be used where a replacement main residence is bought before the old one is sold, and where a company or other non-individual buys residential property.

Key takeaways

• The property type code must reflect the whole transaction, not just the main building.
• A transaction is mixed if it includes both residential and non-residential elements, including across linked transactions.
• Residential additional property code 04 has a wide scope and includes some cases where a refund may later be available.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Selecting Property Type Codes on SDLT Forms SDLT1, SDLT3,

View all HMRC SDLT Guidance Pages Here