SDLT higher rates when you own overseas property and cannot sell
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Do overseas properties stop you getting first-time buyer SDLT relief in the UK?
Introduction
Many buyers assume that if they are purchasing their first home in the UK, they should qualify for first-time buyer Stamp Duty Land Tax relief. The position is often more complicated where the buyer already owns residential property abroad.
A common question is whether an overseas flat or house can be ignored because it has not been lived in for years, cannot practically be sold, or is in a country where disposal is difficult. The short answer is that the higher rates and the loss of first-time buyer relief usually turn on ownership, not fairness or convenience.
The Question
A married couple are buying their first home in the UK to live in. They have rented in the UK for several years, but each of them still owns a flat in another country. Those overseas properties are worth more than £40,000 each. They have not lived in those flats for a long time and say they cannot realistically sell them before the UK purchase because of legal and practical barriers in that country.
They want to know:
- whether they can still claim first-time buyer SDLT relief in the UK;
- whether the overseas flats can be ignored because they are not their current or recent main residence;
- whether physical inability to sell those flats can avoid the higher rates; and
- whether a refund might be available later.
Nick’s Explanation
Nick’s core point was that the SDLT rules on additional dwellings are strict. In anonymised form, his explanation was:
“If you own another residential property anywhere in the world in your own name, you will usually be liable to the higher rates when buying a dwelling in England, unless a specific exception applies.”
He also highlighted the £40,000 threshold. If an existing dwelling interest is worth less than £40,000, it is generally disregarded for the higher rates. But where the overseas properties are worth more than that, the threshold does not help.
Nick further explained that a refund is normally tied to replacement of a previous only or main residence. If the old property was not the buyer’s only or main residence, selling it later will not usually trigger a refund. He also noted that HMRC may allow extra time in some exceptional cases where a sale was prevented by events beyond the buyer’s control, but that is a narrow area and does not usually help where the obstacle was already known before the new purchase.
The Law
The main SDLT rules are found in the Finance Act 2003.
For first-time buyer relief, the key rule is that the purchaser must never previously have had a major interest in a dwelling anywhere in the world. This is not limited to UK property. If a buyer already owns or has owned a dwelling abroad, that normally blocks first-time buyer relief.
For the higher rates on additional dwellings, the relevant rules are in Schedule 4ZA to the Finance Act 2003. Broadly, the higher rates apply if, at the end of the day of the transaction:
- the buyer owns a major interest in another dwelling worth £40,000 or more; and
- the new purchase is not a replacement of the buyer’s only or main residence.
These rules can apply to property located anywhere in the world, not just in the UK.
Where a married couple buy jointly and are living together, the rules are applied on a combined basis for many SDLT purposes. In practice, if either spouse has an interest in another dwelling that counts, that can affect the joint purchase.
A refund of the higher rates is possible in some cases if the buyer later disposes of the former only or main residence within the permitted period. But the refund mechanism is based on replacing a main residence, not simply reducing the number of properties owned.
Analysis
Step one is first-time buyer relief. That relief is not available if either buyer has previously owned a major interest in a dwelling anywhere in the world. On the facts described, each spouse already owns an overseas flat. That means the purchase is not a first-time buyer purchase for SDLT purposes, even if it is their first home in the UK.
Step two is the higher rates test. If each buyer owns an overseas flat worth more than £40,000, those dwellings are counted unless a specific exclusion applies. The fact that the properties are abroad does not stop them counting.
Step three is whether the UK purchase is a replacement of an only or main residence. That usually requires disposal of a previous only or main residence and acquisition of a new one. Here, the couple have been living in rented accommodation in the UK. Their overseas flats have not been their only or main residence for several years. So there is no disposal of a previous only or main residence linked to the purchase.
Step four is whether inability to sell changes the answer. In general, no. The higher rates apply by reference to ownership at the effective date of the transaction. If the buyers still own the overseas dwellings on completion, and the transaction is not a replacement of a main residence, the higher rates usually apply.
Step five is whether a later refund could be claimed. Normally, no refund arises unless the property sold later was the former only or main residence. If the overseas flats were not the buyers’ only or main residence, selling them later would not usually create refund entitlement.
Step six is whether “exceptional circumstances” help. HMRC has, in limited situations, accepted that a delayed sale of a former main residence may still support a refund where the delay was caused by exceptional events beyond the buyer’s control. But that line of argument still depends on there being a former only or main residence to dispose of. It does not create a refund right where the property sold was never the relevant main residence.
So the practical difficulty in selling the overseas flats does not convert them into an ignored asset, and it does not turn a non-main-residence disposal into a qualifying replacement.
It is also worth distinguishing this issue from the separate question whether a property is uninhabitable or not suitable for use as a dwelling. In that area, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That case underlines that SDLT relief arguments based on condition are not easy to establish. In any event, that is a different issue from ownership of overseas dwellings.
Outcome
On these facts, the likely outcome is:
- no first-time buyer SDLT relief;
- the higher rates for additional dwellings are likely to apply on the UK purchase; and
- a later refund is unlikely if the overseas flats were not the buyers’ former only or main residence.
The fact that the buyers have rented in the UK for years, cannot practically sell the overseas flats, or regard the result as unfair does not usually alter the statutory outcome.
Practical Steps
If you are in a similar position, the sensible steps are:
- Confirm exactly what interests each buyer owns in any dwelling worldwide.
- Check the market value of each overseas property and whether any interest falls below the £40,000 threshold.
- Review whether any property disposed of before or after completion was genuinely the buyer’s only or main residence for SDLT purposes.
- Ask your conveyancer to analyse the transaction under Schedule 4ZA Finance Act 2003 before exchange and completion.
- Do not assume that overseas property is irrelevant simply because HMRC may find it harder to verify than UK property.
- Keep evidence of occupation history, ownership, valuations, and any barriers to sale in case HMRC later asks questions.
If there is any possible argument that a previous dwelling was in fact your only or main residence, that point needs careful factual review. The refund rules are technical and depend heavily on the exact sequence of occupation, ownership and disposal.
Conclusion
Owning residential property abroad usually prevents first-time buyer SDLT relief and can trigger the higher rates on a UK home purchase. The rules focus on existing ownership and replacement of a former main residence. If the overseas property is worth more than £40,000 and is not being sold as the former only or main residence, the higher rates will usually apply and a refund will usually not be available later.
Legal References Used
- Finance Act 2003
- Finance Act 2003, Schedule 4ZA
- First-time buyer relief provisions in Finance Act 2003
- HMRC guidance on Stamp Duty Land Tax: buying an additional residential property
- 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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