Shared Ownership & SDLT

Key facts

Shared ownership buyers can choose between a market value election or paying on the initial share.
With no election, SDLT is based on your initial share purchase price plus any rent payable on the retained share.
A market value election means SDLT is calculated on the full market value but no further SDLT on staircasing.
First-time buyer relief is available on shared ownership purchases.
Staircasing (buying additional shares) may trigger further SDLT if no market value election was made.

How Shared Ownership Works

Shared ownership allows you to buy a share of a property (typically 25% to 75%) and pay rent on the remaining share to a housing association or registered provider. Over time, you can staircase — buying additional shares until you own the property outright.^[1]

SDLT on shared ownership purchases is more complex than standard purchases because you are simultaneously buying a share and taking on a lease. Two approaches are available.

Option 1: Pay SDLT on Your Initial Share (No Election)

If you do not make a market value election, SDLT is calculated on:^[2]

The premium you pay for your initial share (e.g. 50% of market value)
The net present value (NPV) of the rent payable on the retained share (the housing association’s portion)

This gives a lower upfront SDLT cost, but staircasing above 80% will trigger additional SDLT.

Staircasing Without an Election

Staircasing transactions that bring your total ownership to 80% or less are exempt from SDLT
When you staircase above 80%, SDLT is charged on the consideration paid for that staircasing transaction
The rates applicable to the staircasing transaction are the standard residential SDLT rates

Option 2: Market Value Election

If you make a market value election, SDLT is calculated on the full market value of the property at the time of your initial purchase, regardless of the share you actually buy.^[2]

The advantage is simplicity:

You pay SDLT once, based on the full market value
No further SDLT is payable when you staircase, even above 80%
The election is irrevocable — once made, it cannot be withdrawn

When to elect: A market value election tends to make sense for higher-value properties where future staircasing is planned. For lower-value properties (especially those eligible for first-time buyer relief), paying on the initial share often results in less total SDLT.

Worked Examples

Example: £300,000 Property, 50% Share, First-Time Buyer

Approach	Consideration for SDLT	SDLT (with FTB relief)
No election (pay on share)	£150,000 share + rent NPV	£0 (below £300,000 FTB threshold)
Market value election	£300,000 full market value	£0 (equals £300,000 FTB threshold)

In this example, both options result in £0 SDLT for a first-time buyer. However, without an election, future staircasing above 80% would trigger SDLT on the staircasing payment.

Example: £400,000 Property, 50% Share, Not First-Time Buyer

Approach	Consideration for SDLT	SDLT
No election (pay on share)	£200,000 share + rent NPV	£1,500 (on £200,000)
Market value election	£400,000 full market value	£10,000 (on £400,000)

Here, paying on the initial share is significantly cheaper upfront. The buyer should weigh this against the potential SDLT on future staircasing.

First-Time Buyer Relief on Shared Ownership

First-time buyer relief can be claimed on shared ownership purchases. The relief applies to the relevant consideration:^[3]

No election — relief applies to the initial share price. The £500,000 cap applies to the share price, not the full market value
Market value election — relief applies to the full market value. The £500,000 cap applies to the full market value

Tip: If you are a first-time buyer purchasing a shared ownership property worth more than £500,000, you will lose FTB relief under a market value election but may retain it without an election (provided your share price is £500,000 or less). Discuss the options with your solicitor before deciding.

Frequently Asked Questions

What is a market value election?

A market value election means you choose to pay SDLT based on the full market value of the property at the time of your initial purchase, rather than on the share you are buying. The advantage is that you will not owe additional SDLT when you later “staircase” (buy further shares).

Which option is better: market value election or paying on my share?

It depends on your circumstances. Paying on your share gives a lower upfront SDLT cost, but you may face additional SDLT when staircasing above 80%. A market value election costs more initially but protects you from future SDLT charges. For lower-value properties where first-time buyer relief applies, paying on the share is often cheaper overall.

Do I pay SDLT when I staircase?

If you made a market value election, no. If you did not make an election, staircasing transactions up to 80% ownership are exempt. When you staircase above 80%, SDLT is due on the amount paid for that final staircasing transaction at the standard rates.

Can I claim first-time buyer relief on shared ownership?

Yes. First-time buyer relief can be claimed on shared ownership purchases, whether you make a market value election or not. The relief applies to the relevant consideration (market value or share price, depending on your election).

Sources

Shared ownership: buying a home you part-rent and part-buy — GOV.UK
SDLTM28000 – Shared ownership leases — HMRC
Stamp Duty Land Tax relief for first time buyers — GOV.UK