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If you’re buying a shared ownership home, you’re purchasing a portion of the property rather than the whole thing, which means the rules around stamp duty are slightly different.
When you buy through shared ownership, you have a choice on how to pay stamp duty and there are two options:
This means you pay stamp duty on the full market value of the property, even though you're only buying a portion of it. This is known as making a 'market value election'. Although this increases your upfront costs, the benefit of this option is that you won't have to pay stamp duty again if you decide to buy more of your shared ownership home later on.
Let's say the home you want to buy is £320,000 and you're buying a 25% portion for £80,000.
If you pay upfront, your stamp duty will be based on the full £320,000.
If you're a first time buyer, this means you'll pay £1,000 in stamp duty. If you're not, you'll pay £6,000.
With this option, you only pay stamp duty on the portion you're buying now. Whilst this keeps your upfront costs lower, if you later decide you want to buy more of your shared ownership home and eventually own more than 80% of the property, you may need to pay stamp duty again.
Again, let's say the home you want to buy is £320,000 and you're buying a 25% portion.
If you pay in stages, your stamp duty will be based on £80,000 (your 25% portion).
Whether you're a first time buyer or not, this means you won't pay any stamp duty. This is because £80,000 is below the current stamp duty thresholds.
But remember, if you later decide to buy a bigger portion and go above 80%, you may need to pay stamp duty then.
The best option for you depends on your budget and whether you plan to buy more of your shared ownership home in the future.
Stamp duty can feel overwhelming, but there are ways to make it more manageable:
