SDLTM09651 - Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: Qualifying Housing Co-operatives

Qualifying Housing Co-operatives FA03/SCH4A/PARA5FA

For transactions with an effective date on or after 3 March 2021, the 17 per cent higher rate charge will not apply to a transaction which meets the conditions set out below. Instead, SDLT will be charged at the higher rates which apply to dwellings purchased by companies (see SDLTM09835).

However, a further return and payment of additional SDLT will be required if the relevant rules set out in Withdrawal of relief – qualifying housing co-operatives (SDLTM09681) apply.

The 17 per cent higher rate charge will not apply to a transaction where the subject matter of the transaction includes a higher threshold interest that is acquired by a qualifying housing co-operative.

A ‘qualifying housing co-operative’ is defined for this purpose in section 150A Finance Act 2013, as one which:

  • is a housing association within the meaning of the Housing Associations Act 1985, or Part 2 of the Housing (Northern Ireland) Order 1992,
  • is a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014, or the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969, and
  • has rules which comply with section 150A(2) Finance Act 2013 (see below).

The rules of the association must:

  • restrict membership to individuals who are tenants, or prospective tenants of the property,
  • prevent the granting or assignment of tenancies to individuals other than members of the association,
  • prevent the members of the association from transferring any of their shares,
  • prevent the members of the association from making a gain on a return of share capital, and
  • give members equal voting rights.

The Financial Conduct Authority (FCA) is responsible for the registration of co-operative societies under the Co-operative and Community Benefit Societies Act 2014 or the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969. The FCA maintains a register of all co-operative societies which can be found on the FCA website. The register provides details of the rules and registered status of each co-operative society.

A similar relief is available for qualifying housing co-operatives from the Annual Tax on Enveloped Dwellings. For more information see section 41 of the ATED Technical Guidance.