Can bare ownership of a foreign property stop you claiming first-time buyer SDLT relief?

Introduction

A common SDLT question is whether an interest in property outside the UK prevents a buyer from qualifying as a first-time buyer. The issue often arises where someone has inherited or been given a limited form of ownership abroad, especially where another person keeps the right to live in the property or receive income from it.

The key question is not simply whether a person is named on foreign title documents. The real issue is whether they previously acquired a “major interest” in a dwelling, or an equivalent interest in a dwelling outside England, Wales and Northern Ireland, for the purposes of Schedule 6ZA to the Finance Act 2003.

The Question

A couple buying their first home in the UK wanted to know whether a foreign property interest would block first-time buyer SDLT relief. Their interest arose under overseas law as bare ownership only, while another person held the usufruct and therefore kept the rights to occupy, use and benefit from the property. The buyers wanted to know whether that foreign bare ownership counted as a “major interest” in a dwelling.

Nick’s Explanation

Nick’s reasoning was that first-time buyer relief depends on whether either buyer has previously acquired a major interest in a dwelling, including an equivalent interest in a dwelling outside the relevant UK jurisdictions.

In anonymised form, his explanation was that a major interest usually involves substantial beneficial ownership, including immediate rights to occupy, use, let or profit from the property. He noted that where a person holds only bare ownership and another person has the usufruct, the bare owner may have legal title but no present beneficial enjoyment.

He explained the position in substance as follows:

• a major interest generally involves meaningful control or enjoyment of the property;
• interests without present beneficial rights may fall short;
• where the holder cannot occupy the property, let it, or derive income from it, the interest may be only reversionary in nature;
• on that basis, foreign bare ownership may not amount to a major interest for SDLT purposes.

He also noted that the buyer should review the underlying foreign legal documents carefully before making any SDLT return.

The Law

First-time buyer relief is contained in Schedule 6ZA to the Finance Act 2003. Broadly, relief is available only if each purchaser is a first-time buyer.

Part 3 of Schedule 6ZA provides that a “first-time buyer” means an individual who:

• has not previously been a purchaser in relation to a land transaction the main subject-matter of which was a major interest in a dwelling; and
• has not previously acquired an equivalent interest in a dwelling situated in a country or territory outside England, Wales and Northern Ireland.

The meaning of “major interest” is given by section 117 of the Finance Act 2003. In relation to land in England, it means:

• an estate in fee simple absolute; or
• a term of years absolute.

In simple terms, that usually means freehold ownership or a substantial leasehold interest.

For overseas property, the legislation refers to an “equivalent interest”. That requires a comparison between the foreign right and the kind of ownership interest that would amount to a major interest under the UK SDLT rules.

Analysis

The correct analysis is functional rather than purely formal. Being named on a foreign title register does not automatically mean the person has acquired an equivalent of a freehold or long lease for SDLT purposes.

The main points to test are these:

1. What rights does the person actually hold?

   If the person has only bare ownership, that may mean they hold title subject to another person’s right of use and enjoyment.

2. Who has the beneficial enjoyment?

   If the usufructuary has the right to occupy the property, receive rents, or otherwise exploit it economically, then the bare owner may lack the present benefit normally associated with a major interest.

3. Can the bare owner presently use, let, or profit from the dwelling?

   If not, that points away from the interest being equivalent to a freehold or long leasehold major interest.

4. Is the interest merely reversionary?

   If the rights only become meaningful when the usufruct ends, the interest may be contingent or deferred rather than a present major interest.

5. Is the foreign property even a dwelling for SDLT purposes?

   If the overseas property is not residential in character, that may affect the analysis. But that is a separate issue from whether the person has a major interest in a dwelling.

On the facts described, the better view is that bare ownership alone may well fall short of an equivalent major interest where the holder has no present right to occupy, no right to income, and no practical control over the property’s use.

That said, this is a fact-sensitive area. The exact foreign law rights matter. Different legal systems use similar labels for rights that do not always match exactly. A document translated as “bare ownership” may still carry wider powers than expected, and those powers could change the SDLT result.

It is also important not to confuse this issue with other SDLT questions, such as whether a property counts as a dwelling, whether the higher rates for additional dwellings apply, or whether a building is unsuitable for use as a dwelling. In any uninhabitable or not suitable for use case, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Outcome

If a buyer’s overseas interest is truly limited to bare ownership, with another person holding the usufruct and all present rights of occupation and benefit, that interest may not amount to a major interest or equivalent interest for the purposes of first-time buyer relief.

In that situation, the buyer may still qualify as a first-time buyer for SDLT, provided all other conditions in Schedule 6ZA are met and the other purchaser also qualifies.

Practical Steps

• Obtain the foreign title documents, trust documents, usufruct documents, inheritance papers or transfer deeds.
• Check exactly who has the rights to occupy, use, let, mortgage and sell the property.
• Confirm whether the holder of bare ownership has any current right to income or possession.
• Get a reliable translation if the documents are not in English.
• Ask the conveyancer preparing the SDLT return to review the foreign interest against Schedule 6ZA and section 117 Finance Act 2003.
• Keep a written record of why the foreign interest is said not to be equivalent to a major interest.
• Take extra care if the overseas property is mixed-use, non-residential, inherited, or subject to life interests or usufruct arrangements, because those details can affect the analysis.

Conclusion

For first-time buyer SDLT relief, the question is whether the buyer previously acquired a major interest in a dwelling, or an equivalent overseas interest. A foreign bare ownership interest with no present right to occupy, enjoy or profit from the property may not be enough to disqualify the buyer. The answer depends on the precise legal rights held, not just the label attached to them.

Legal References Used

• Finance Act 2003, Schedule 6ZA
• Finance Act 2003, section 117
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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