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Under the current rules, the commercial property rates apply to mixed dwellings regardless of the split between the residential and non-residential elements. The SDLT payable on a mixed-use property can be significantly less than on a residential property of the same value.

Example

Harry buys a shop with a flat above it on 1 March 2022 for £500,000. His brother Luke buys a house for £500,000 completing on the same day.

Harry pays SDLT at the commercial rates, resulting in an SDLT bill of £14,500 ((£150,000 @ 0%) + (£100,000 @ 2%) + (£250,000 @ 5%)).

Luke pays SDLT at the residential rates, resulting in an SDLT of £15,000. If the second and subsequent property supplement applies, the SDLT bill will be £30,000. The supplement adds an additional £15,000 to the bill (£500,000 @ 3%).

Having a non-residential element, particularly where the 3% supplement would apply to a residential purchase, can significantly reduce the SDLT payable.