Stamp Duty and Property

Residential property

What is residential property?

A house or apartment that is used as a dwelling is residential property for Stamp Duty purposes.

Residential property also includes buildings, or parts of buildings, that:

  • are suitable for use as a dwelling
  • are in the course of being built, or adapted for use, as a dwelling
  • were built or adapted for use as a dwelling and not subsequently used for any other purpose.

Curtilage up to an area of one acre is also residential property. Curtilage includes gardens, paths, driveways, yards, garages or sheds used in conjunction with a house. It does not include the site of the house. If the curtilage exceeds one acre, the area in excess is non-residential property.

The property must be residential on the date of execution (signing, sealing or both) of the instrument (written document) transferring the property.

However, the definition links to the rating system operated by local authorities. If, on 31 December in the calendar year before the transfer, the rating of:

  • the building was non-residential
  • any part of the building was non-residential,

you treat the building, or the part rated as non-residential, as non-residential property for Stamp Duty purposes.

Planning permission

You may have planning permission to change the use of a building to residential before the building is transferred to you. Or you may have planning permission to build a house on a site. Planning permission does not make the building or the site residential and you cannot take it into account.

Derelict house

Local Property Tax (LPT) is paid on a relevant residential property. A derelict house is not a relevant residential property. This means that LPT is not paid on a derelict house. However, for Stamp Duty purposes residential property includes a derelict house.

You will need an LPT Property ID number to file the Stamp Duty return. For more information, see Details needed to file a return.

Residential property bought as an investment

You may buy a residential property that is leased to tenants. Or you may buy a residential property intending to lease it to tenants. For Stamp Duty purposes the property is residential if it meets the definition of residential property set out above.

Buying a site

A site is non-residential property. However, if you buy a site with a connected agreement to build residential property on it, the site is residential property. You pay Stamp Duty on the site cost plus the cost of the building, exclusive of any Value-Added Tax (VAT).

The

  • agreement to buy the site
  • and
  • the building agreement

are connected if you cannot have the site transferred to you without the residential property being built on it.

Next: Non-residential property