Shared ownership schemes continue to offer a more affordable route onto the property ladder in 2025, especially for first-time buyers. However, understanding how Stamp Duty Land Tax (SDLT) applies to these arrangements can be a little more complex than with standard purchases.
Whether you’re purchasing your first share in a property or planning to staircase to a larger share, it’s important to know your Stamp Duty responsibilities upfront. This guide outlines how SDLT works for shared ownership buyers in 2025 and what options you have when it comes to payment.
What Is a Shared Ownership Property?
Shared ownership is a government-backed scheme designed to help people buy a share of a property (usually between 10% and 75%) and pay rent on the remainder to a housing association. Over time, buyers may choose to purchase more shares — a process known as “staircasing” — until they own the property outright.
This structure affects how and when Stamp Duty must be paid, and the decisions made at the point of purchase can influence your future tax liability.
Two Ways to Pay Stamp Duty on Shared Ownership
If you’re buying a shared ownership home, you typically have two options for how Stamp Duty is calculated and paid:
1. Market Value Election
With this option, you agree to pay Stamp Duty based on the full market value of the property from the outset, even though you’re only buying a portion of it.
Benefits:
- You won’t have to pay SDLT again if you buy more shares in the future (even up to 100%)
- It simplifies future transactions
Drawbacks:
- You pay a higher upfront tax bill
- This may not be affordable for some buyers
This approach can be worthwhile if you’re confident you’ll staircase to full ownership later, especially within a few years.
2. Paying SDLT in Stages
Alternatively, you can choose to pay Stamp Duty only on the value of your initial share. For example, if the full market value is £300,000 and you purchase a 25% share worth £75,000, your SDLT will be calculated on that £75,000 — and you may pay nothing, depending on thresholds and available reliefs.
However, you’ll become liable for SDLT again each time you staircase, depending on the value of the additional share(s) and whether the combined total exceeds certain thresholds.
Drawbacks:
- You may end up paying more SDLT in total over time
- Staircasing transactions may involve legal and administrative fees in addition to any SDLT owed
First-Time Buyer Relief Still Applies
Good news for shared ownership buyers in 2025: first-time buyer Stamp Duty relief remains available if:
- The full market value of the property is £625,000 or less
- You’re a genuine first-time buyer
- The property will be your main residence
If you meet the criteria and choose the market value election, you may not owe any Stamp Duty at all on the purchase. For properties up to £425,000, there is no SDLT to pay. Between £425,001 and £625,000, 5% is charged only on the portion above £425,000.
Relief does not apply if the full market value of the property exceeds £625,000.
Staircasing and Stamp Duty in 2025
If you choose to pay SDLT in stages, you’ll only become liable for SDLT again once your total ownership reaches more than 80% of the property. At that point, any further share you buy will be subject to Stamp Duty based on the price of the new share.
Be aware that you cannot claim first-time buyer relief on additional shares purchased later — that only applies at the point of your first acquisition.
Key Tips for Shared Ownership Buyers
- Use a Stamp Duty Calculator: Estimate what you’ll owe under both payment options before committing.
- Talk to your solicitor: Your conveyancer can advise you on which option may be best based on your plans.
- Think long term: If you’re likely to staircase soon, the market value election may save you time and money in the future.
- Understand your full costs: Include SDLT in your overall budget, especially if you’re close to key thresholds.
Final Thoughts
Stamp Duty on shared ownership homes can feel complicated, but it doesn’t have to be. By understanding your payment options and eligibility for reliefs, you can make informed decisions that work for your budget — both now and in the future.
Before making your purchase, try our Stamp Duty Calculator to get a clear estimate based on your chosen share and payment method.