Shared Ownership Leases: SDLT and LTT Implications for Staircasing Transactions in

LTT on staircasing shared ownership leases that started under SDLT

For Welsh shared ownership leases originally granted when SDLT applied, later staircasing does not always stay within SDLT. If no market value election was made, staircasing to 80% or less can be exempt from SDLT and relieved from LTT, but a later step taking the buyer above 80%, or buying the reversion, is subject to LTT.

• The rules apply to shared ownership leases in Wales first granted before 1 April 2018, when SDLT still applied.
• The treatment depends on both the original lease history and the buyer’s total share after the new staircasing purchase.
• Where no market value election was made, staircasing that leaves the buyer with 80% or less can qualify for LTT relief on a claim.
• If the staircasing takes the buyer above 80%, the later transaction falls within LTT even though the lease began under SDLT.
• Buying the landlord’s reversion is also subject to LTT in these cases.
• If the transaction is not notifiable, such as where the price is under £40,000, no LTT return and no claim to relief are needed.

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LTT and staircasing under shared ownership leases that originally fell within SDLT

This page explains what happens for Welsh land transaction tax (LTT) when a shared ownership lease was originally granted while stamp duty land tax (SDLT) still applied, and the buyer later increases their share in the property. The key point is that the tax treatment depends both on when the original lease was granted and on whether the staircasing takes the buyer’s total share above 80%.

What this rule is about

Shared ownership allows a buyer to acquire a leasehold interest in a dwelling in stages. The buyer starts with an initial share and may later buy further shares. Those later purchases are commonly called staircasing transactions.

The source material deals with a transitional situation in Wales. It concerns shared ownership leases that were originally granted at a time when SDLT applied, rather than LTT. The question is how later staircasing transactions are treated once LTT is in force.

This matters because a buyer may assume that if the original lease was dealt with under SDLT, all later steps will also stay within SDLT. The official material says that is not always right. In some cases, later staircasing is exempt or relievable. In others, LTT can apply to a later step even though the arrangement began before LTT existed.

What the official source says

The official material draws a distinction between two types of later staircasing transaction.

First, if the original grant of the shared ownership lease was an SDLT transaction and no market value election was made, a later staircasing transaction is exempt from SDLT, and can be relieved from LTT on a claim, so long as the lessee’s total share in the dwelling does not exceed 80% after that staircasing step.

Secondly, where the original grant of the shared ownership lease was an SDLT transaction in Wales, meaning before 1 April 2018, a later staircasing transaction that takes the lessee’s total share above 80% is subject to LTT. The same applies to the acquisition of the reversion.

The source also makes clear that this can apply even where the shared ownership purchase began while SDLT was still in force. In other words, the fact that the arrangement started under SDLT does not prevent a later transaction from falling within LTT.

The source adds an important practical point about claims. If the transaction is not notifiable, for example because the price for the additional share is less than £40,000, no return and no claim to relief are required.

What this means in practice

If you are looking at a staircasing transaction in Wales, you need to separate the original lease grant from the later staircasing step. They may not be taxed under the same regime.

Where the original lease was granted under SDLT and no market value election was made, staircasing up to and including 80% is effectively protected from charge in the way described by the source. Under LTT, relief is available on a claim. But if the transaction is below the notification threshold mentioned in the source, no return and no claim are needed.

Once the buyer goes beyond 80%, the position changes. A staircasing transaction that takes the buyer’s total share over 80% is subject to LTT. The same is true if the buyer acquires the landlord’s reversion.

This means that someone who has staircased gradually over time may face no tax filing requirement for earlier steps, but may face an LTT charge when they cross the 80% point or acquire the reversion.

How to analyse it

A sensible way to approach the issue is to ask the following questions:

• Was the original grant of the shared ownership lease an SDLT transaction?
• Was that original grant in Wales before 1 April 2018?
• Was a market value election made on the original grant? The source rule discussed here only covers the case where no market value election was made.
• What is the buyer’s total share after the staircasing transaction?
• Does the staircasing leave the buyer at 80% or less, or does it take them above 80%?
• Is the transaction an acquisition of the reversion rather than just a further share?
• Is the transaction notifiable? If not, the source says no return and no claim to relief are required.

That framework helps identify whether the later transaction is one that is relieved, or one that falls into charge under LTT.

Example

Illustration: a buyer acquired a shared ownership lease of a Welsh dwelling before 1 April 2018, when SDLT applied. No market value election was made. The buyer later purchases further shares.

If one staircasing transaction takes the buyer from 50% to 75%, the source says that this type of transaction is exempt from SDLT and relieved from LTT on a claim, provided the total share does not exceed 80%.

If a later staircasing transaction takes the buyer from 75% to 85%, that later step takes the total share above 80%. The source says that this transaction is subject to LTT.

If instead the buyer acquires the reversion, the source says that acquisition is also subject to LTT.

Why this can be difficult in practice

The main difficulty is that the tax treatment depends on a combination of historic and current facts. You need to know not only what is happening now, but also how the original lease was treated when it was granted.

A second difficulty is that the source refers specifically to cases where no market value election was made. If there was a market value election, this page does not explain the result, so you should not assume the same treatment applies.

A third issue is procedural. Relief may depend on a claim, but the source also says that if the transaction is not notifiable, no return and no claim are required. That means the practical filing position may differ from what a reader expects when they see the word relief.

Finally, the 80% threshold is critical. A transaction that stays at or below 80% is treated very differently from one that crosses above it. Small differences in the size of the share acquired can therefore change the tax result.

Key takeaways

• For shared ownership leases originally granted under SDLT, staircasing up to 80% can be exempt or relieved where no market value election was made.
• In Wales, a later staircasing transaction that takes the buyer above 80%, or an acquisition of the reversion, is subject to LTT even if the arrangement began under SDLT.
• If the staircasing transaction is not notifiable, the source says no LTT return and no claim to relief are required.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Shared Ownership Leases: SDLT and LTT Implications for Staircasing Transactions in

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