Part-Exchange SDLT Relief for Property Traders
- Taylor Keeble
- Mar 31
- 2 min read
When a house-building company acquires a home from an individual who, in turn, purchases a new property from the same company, the transaction may qualify for Stamp Duty Land Tax (SDLT) relief. This exemption applies if specific conditions related to residency, mutual consideration, and land area are met.
Many developers offer part-exchange schemes, allowing homeowners to trade in their existing property for a new one. This approach simplifies the process for sellers, removing the need to find a buyer. Ordinarily, the developer would be liable for SDLT on the acquisition of the old property. However, when the qualifying conditions are met, the house builder or property trader is exempt from SDLT.
Conditions for SDLT Relief
To qualify for the exemption, the following conditions must be met:
The acquiring company must be a limited company or a limited liability partnership (LLP) (where any companies or LLPs members are house-building companies or LLPs).
The individual selling their old property must have lived in it as their main residence at some point within the two years before the part-exchange transaction.
The individual must purchase a new property from the same developer and intend to occupy it as their main residence.
The land area of the exchanged property must not exceed 0.5 hectares.
Example
Simon owns a house in Surrey valued at £1 million, with a land area of no more than 0.5 hectares. He approaches a property development company that offers him £600,000 for his existing home and a new flat valued at £400,000.
Under normal circumstances, the developer would pay SDLT on the full £1 million acquisition. However, because the transaction meets the relief conditions, the company qualifies for the SDLT exemption, meaning no SDLT is due.
Speak to an Expert
Numerous SDLT reliefs and exemptions are available, but without specialist knowledge, they can be easily overlooked. Given the high SDLT rates, property developers and traders should actively explore these opportunities to optimise costs.
Authored by: London Team
