SDLTM28005 - Reliefs: Alternative property finance
General overview and definitions FA03/S71A and FA03/S73
Relief from multiple charges to stamp duty land tax is available for three types of alternative property finance scheme, one of which has two variants.
The result is that the stamp duty land tax payable is in line with that which would be payable if a property was purchased using a conventional mortgage product.
These reliefs are available to persons using alternative property financing arrangements.
Where relief is claimed a land transaction return must be completed claiming the relief and showing the chargeable consideration as the price that has been agreed between the parties to the transaction.
Land purchased by financial institution and leased to a person - A person(s) enters into arrangements with a financial institution whereby the financial institution purchases the property or an undivided share in the property which is held on trust for the institution and the person as beneficial tenants in common. Out of that interest the financial institution grants the person a long lease with an option to have the reversion transferred.
The person makes regular payments during the term of the lease. At the end of the lease, the person can exercise their right and have the reversion transferred to themselves. See SDLTM28100.
The beneficial ownership can be transferred in any number of transactions to the tenant during the course of the lease. The right to have the reversion transferred at the end of the agreement is maintained. See SDLTM28100.
Land purchased by financial institution and re-sold to person - A person(s) enters into arrangements with a financial institution whereby the financial institution purchases a property and sells it to the person who in turn grants the financial institution a legal mortgage. See SDLTM28400.
Definitions
A ‘financial institution’ has the meaning given by section 73BA of the Finance Act 2003 (Meaning of “financial institution).
Legal mortgage
- for land in England means a legal mortgage as defined in section 205(1)(xvi) of the Law of Property Act 1925
- for land in Northern Ireland, this means a mortgage by conveyance of a legal estate or by demise or sub-demise or a charge by way of legal mortgage