Right to buy is a policy maintained by the Office of the Deputy
Prime Minister which allows public sector tenants to purchase
property on the basis of length of occupancy.
Full details of the Office of the Deputy Prime
Minister’s legislation is available on it’s website
www.odpm.gov.uk under ‘Home’.
The Office of the Deputy Prime Minister determines two
factors relevant to the stamp duty land tax treatment of a right to
buy transaction.
This is relevant to stamp duty land tax as it determines the price actually paid for property
If the property is re-sold within a specific number of years, currently 5 years, the difference between the price paid by the eligible tenant in the right to buy transaction and the re-sale price is payable to the body that originally held the property
The intention behind FA03/SCH9/PARA1 is to ensure that tax is
payable on the actual consideration paid by the purchaser at the
effective date of the transaction.
The market value of the property is not used to calculate the
stamp duty land tax liability.
FA03/SCH9 also disapplies FA03/S51. This ensures that stamp
duty land tax is not charged on the contingent consideration that
would otherwise result from the period of discount repayment.
Sales at a discount by the public bodies defined in FA03/SCH9
are eligible for stamp duty land tax relief, but this only applies
to the potential repayments to the vendor.
In some cases a tenant can maintain a preserved right to buy
as defined by the Office of the Deputy Prime Minister.
The stamp duty land tax treatment of preserved right to buy
acquisitions is the same as treatment of right to buy from a
defined public sector body.
On form SDLT1 the code for the right to buy relief is 22.
For question 10 for freeholds or assigned leases and 22
and/or 23 for new leases the actual consideration paid by the
purchaser should be entered.
The tax payable on this consideration should be entered in
box 14.
The market value of the property should not be included
anywhere on the form.
