LBTT Relief Guidelines for Registered Social Landlords in Scotland

LBTT relief for some property purchases by registered social landlords in Scotland

This relief can remove LBTT on certain property acquisitions by registered social landlords in Scotland, but it does not apply automatically to every social housing transaction. The buyer must be a registered social landlord, at least one statutory qualifying condition must be met, and the relief must be claimed properly in the LBTT return or by a valid amendment made in time.

• The relief is aimed at the purchaser, so the buyer must be a registered social landlord registered with the Scottish Housing Regulator and operating in Scotland.
• Only one qualifying condition is needed, such as tenant control, a tenant-majority board, purchase from another RSL, the Scottish Ministers or a local authority, or funding through specified statutory grant routes.
• It is not a general exemption for all housing associations or all not-for-profit housing activity.
• Where governance conditions are relied on, the RSL’s legal structure matters because “board member” can include directors, trustees, committee members or others managing the body.
• If the claim is based on funding, the financial assistance must fall within the specific statutory provisions named in the legislation and guidance.
• Even if the transaction qualifies, the relief must still be claimed in the original LBTT return or by amendment within the allowed time limit.

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LBTT relief for certain acquisitions by registered social landlords in Scotland

This relief can remove Land and Buildings Transaction Tax from some property purchases by registered social landlords. It matters because the relief is not available for every acquisition by an RSL. The buyer must be an RSL, and at least one specific statutory condition must be met. The rules also matter procedurally, because the relief must be claimed through the LBTT return or by amendment within the allowed period.

What this rule is about

Schedule 6 to the Land and Buildings Transaction Tax (Scotland) Act 2013 gives relief for certain acquisitions by registered social landlords. The policy aim is to support particular transfers of housing stock and certain funded acquisitions in the social housing sector.

The relief is aimed at the buyer. In other words, the purchaser must be a registered social landlord. It is not a general exemption for all housing associations or all not-for-profit housing activity. The transaction must also fall within one of the qualifying routes set out in the legislation.

What the official source says

Revenue Scotland’s guidance says that relief is available where the buyer is a registered social landlord and one or more qualifying conditions are met.

The qualifying conditions described in the source are:

• the tenants control the registered social landlord
• the majority of the board members are tenants occupying properties owned or managed by the RSL
• the seller is a registered social landlord, the Scottish Ministers, or a local authority
• funding for the transaction is provided with the assistance of a grant or other financial assistance under section 25 of the National Lottery etc. Act 1993 or section 2 of the Housing (Scotland) Act 1988

The source also explains who counts as a board member. Depending on the legal form of the RSL, this may mean a director, a member managing the body’s affairs, a trustee, or a member of the management committee or similar management body.

For this relief, a registered social landlord includes bodies such as housing associations, housing co-operatives, Abbeyfield societies and co-ownership societies, provided they are registered with the Scottish Housing Regulator and operate in Scotland.

The source states that meeting any one of the qualifying conditions is enough to claim the relief.

It also states that the relief can only be claimed by:

• including the claim in the original LBTT return, or
• amending the LBTT return within the amendment period

What this means in practice

The practical starting point is simple: an organisation does not get this relief just because it is involved in social housing. The buyer must be a registered social landlord, and there must be a clear route into the relief under Schedule 6.

In practice, the relief appears to cover several distinct situations.

One is where the RSL has a tenant-controlled or tenant-majority governance structure. Another is where property is being transferred to an RSL by another public or social-sector body, such as another RSL, the Scottish Ministers, or a local authority. A further route is where the acquisition is supported by specified public or lottery-based funding.

This means the transaction analysis should focus on three things:

• the status of the buyer
• the governance or structure of the buyer, where relevant
• the identity of the seller or the source of funding, where relevant

If any one of the qualifying conditions is met, that is enough. There is no need to satisfy all of them.

The procedural point is also important. Even if the transaction qualifies in substance, the relief still needs to be claimed correctly through the LBTT return process. If it is omitted from the original return, the buyer may still claim it by amendment, but only within the amendment period allowed by the legislation.

How to analyse it

A sensible way to analyse the relief is to work through the following questions in order.

• Is the buyer a registered social landlord registered with the Scottish Housing Regulator?
• Is the RSL operating in Scotland?
• Does at least one qualifying condition apply?
• If relying on governance-based conditions, who actually controls the RSL and who makes up the board or equivalent management body?
• If relying on the seller condition, is the seller clearly one of the listed bodies?
• If relying on the funding condition, is the assistance within one of the statutory funding routes named in the source?
• Has the relief been claimed in the original LBTT return, or can it still be claimed by amendment within time?

For governance-based conditions, the legal form of the RSL matters. The source gives different descriptions of a board member depending on whether the RSL is a company, another body corporate, a body of trustees, or managed by a committee or similar body. So the constitutional documents and actual management structure may need to be checked rather than assuming that “board member” has a single universal meaning.

Example

Illustration: a housing association that is registered with the Scottish Housing Regulator buys residential property from a local authority. On the source material provided, that seller falls within one of the listed categories. If the buyer is an RSL and the claim is made properly in the LBTT return, the transaction may qualify for the relief even if the RSL is not tenant-controlled and even if no qualifying grant funding is involved, because only one qualifying condition is needed.

Why this can be difficult in practice

The main difficulty is that the relief looks simple at a high level but can be technical once you test the facts against the statutory conditions.

First, whether an organisation is an RSL for this purpose depends on registration with the Scottish Housing Regulator. A body may work in the social housing sector without satisfying that formal requirement.

Second, the governance conditions can be fact-sensitive. Terms such as tenant control and majority of board members require a close look at how the organisation is constituted and run. The source explains who may count as a board member, but applying that to a particular governance structure may still require care.

Third, if the transaction is said to qualify because of grant or financial assistance, the source only identifies certain statutory funding routes. It is not enough that the purchase is publicly supported in a general sense. The funding must fall within the specified provisions.

Fourth, the source is guidance rather than the legislation itself. The legal entitlement comes from Schedule 6 to the LBTT legislation. In any borderline case, the wording of the statute remains the key source.

Finally, the relief is claim-based. A qualifying transaction can still create problems if the claim is not included in the return or corrected in time.

Key takeaways

• This is a relief for certain acquisitions by registered social landlords, not a blanket exemption for all social housing transactions.
• The buyer must be an RSL, and only one of the listed qualifying conditions needs to be met.
• The relief must be claimed through the LBTT return process, either in the original return or by amendment within the amendment period.

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Useful article? You may find it helpful to read the original guidance here: LBTT Relief Guidelines for Registered Social Landlords in Scotland

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