Do you lose first-time buyer relief if you buy jointly and one buyer already owns a flat?

Introduction

This is a common SDLT question. One person already owns a property, often a flat they plan to keep and let out, while the other person has never owned a home before. They then buy a house together and want to know two things: whether the first-time buyer can still claim first-time buyer relief, and whether the higher rates for additional dwellings apply.

The short answer is that if the existing property is still owned at completion, the buyer who already owns that property will usually pay the higher rates on their share, and the other joint buyer will usually lose first-time buyer relief because all joint purchasers must be first-time buyers.

The Question

A buyer already owns a flat in their own name and plans to keep it, with a buy-to-let mortgage. That buyer and their partner are purchasing a new house together for £328,500 in equal shares. The partner has never owned property before and will live in the new house as their main residence. The issue is whether anything has changed in the SDLT analysis and how the tax should be calculated on completion.

Nick’s Explanation

Nick’s view was that, on those facts, the earlier advice still stands. In anonymised form, his explanation was:

Because one buyer already owns another dwelling at the time of completion and is not replacing their only or main residence, the higher rates under Schedule 4ZA Finance Act 2003 apply to that buyer’s share.

He also explained that the other buyer cannot claim first-time buyer relief on a joint purchase where the co-purchaser is not a first-time buyer. Paragraph 1(4) of Schedule 6ZA requires all purchasers to be first-time buyers.

On a 50/50 purchase at £328,500, each share is £164,250. On that basis:

• For the buyer who already owns the flat: standard SDLT of £785, plus 5% higher rates surcharge of £8,212.50, giving £8,997.50, rounded to £8,998.
• For the first-time buyer partner: standard SDLT only of £785, with no first-time buyer relief.
• Total SDLT on the transaction: £9,783.

Nick also noted that if the existing flat had first been transferred to a connected company, that could change the position on the house purchase, but that transfer would itself trigger SDLT on market value and would involve separate tax and practical issues.

The Law

The main SDLT charging provision is section 55 of the Finance Act 2003. It sets the rates and bands for residential transactions.

The higher rates for additional dwellings are in Schedule 4ZA to the Finance Act 2003. Broadly, these rates apply where, at the end of the day of completion, a purchaser owns an interest in another dwelling and is not replacing their only or main residence. Where the higher rates apply, an additional 5% is charged.

First-time buyer relief is in Schedule 6ZA to the Finance Act 2003. One of the key conditions is that every purchaser must be a first-time buyer. Paragraph 1(4) is especially important for joint purchases: if one buyer is not a first-time buyer, the relief is not available for any of the buyers.

Where a property is transferred to a connected company, market value rules can apply so that SDLT is charged by reference to market value even if little or no money changes hands. That is why moving a personally owned flat into a company before buying another home is not a tax-free step.

Analysis

Step 1: identify whether the existing flat is still owned at completion.

If the buyer still owns the flat personally when the new house completes, that buyer is treated as already owning another dwelling.

Step 2: ask whether the new house is replacing that buyer’s only or main residence.

On the facts given, the flat is being kept rather than sold. That means the buyer is not replacing their only or main residence in a way that removes the higher rates charge. Schedule 4ZA therefore applies to that buyer.

Step 3: work out the SDLT on that buyer’s share.

On a 50/50 purchase of £328,500, that buyer’s share is £164,250.

• 0% on the first £125,000 = £0
• 2% on the next £39,250 = £785
• 5% higher rates surcharge on £164,250 = £8,212.50

Total for that buyer: £8,997.50, which is rounded to £8,998.

Step 4: consider first-time buyer relief for the other buyer.

Even though the other buyer has never owned a property before, this is a joint purchase. Under paragraph 1(4) of Schedule 6ZA, all purchasers must be first-time buyers. Because one buyer already owns a flat, the relief is lost for the transaction.

Step 5: calculate the other buyer’s SDLT.

The other buyer’s share is also £164,250. Without first-time buyer relief, the standard rates apply:

• 0% on the first £125,000 = £0
• 2% on the next £39,250 = £785

Total for that buyer: £785.

Step 6: total the SDLT due.

£8,998 plus £785 gives total SDLT of £9,783.

Step 7: consider the alternative of transferring the flat to a company before completion.

That may mean the individual no longer personally owns another dwelling at the point of buying the house. If so, the higher rates may not apply to the house purchase, and the other buyer may potentially qualify for first-time buyer relief if all conditions are met at that stage. But that does not avoid SDLT altogether, because the transfer of the flat to the connected company can itself trigger SDLT on market value.

If readers are considering whether a property is so defective that it is not suitable for use as a dwelling, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. In other words, poor condition, disrepair, or the need for works will not easily take a dwelling outside the residential SDLT rules.

Outcome

On the stated facts, nothing material has changed in the SDLT analysis. If one buyer keeps their existing flat in their own name and then buys a house jointly:

• that buyer will usually pay the 5% higher rates surcharge on their share;
• the other buyer will usually lose first-time buyer relief because the purchase is in joint names and not all purchasers are first-time buyers;
• for a £328,500 purchase split equally, the total SDLT is £9,783.

Practical Steps

If you are in this position, the sensible next steps are:

• confirm who will legally own the new property on completion and in what shares;
• confirm whether any existing property will still be owned personally at the end of the day of completion;
• check whether any sale of an existing main residence is actually taking place, as that can change the higher rates analysis;
• ask your conveyancer to calculate SDLT by reference to the actual beneficial shares being acquired;
• if considering a transfer to a company, obtain advice on SDLT, capital gains tax, mortgage issues, and company law before taking any step;
• do not assume that one joint buyer can claim first-time buyer relief on their own where the other buyer already owns property;
• if arguing that a property is not suitable for use as a dwelling, review the position carefully in light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, because the bar is high.

Conclusion

Where a couple buy together and one of them already owns a flat that is being kept, the usual SDLT result is straightforward: the existing owner pays higher rates on their share, and the first-time buyer relief is lost for the joint purchase. On a £328,500 purchase in equal shares, that produces total SDLT of £9,783.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, Schedule 4ZA
• Finance Act 2003, Schedule 6ZA
• Finance Act 2003, Schedule 6ZA, paragraph 1(4)
• 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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