Shared Ownership Stamp Duty: When Do You Pay & How Much?

Stamp Duty Land Tax (SDLT) on shared ownership properties can be confusing because you have two options for how and when to pay. This guide explains both methods, how first-time buyer relief works, and what happens to stamp duty when you staircase.

The Two Stamp Duty Options for Shared Ownership

When you buy a shared ownership property, you can choose one of two approaches to stamp duty:

You pay stamp duty on the full market value of the property upfront, regardless of the share you’re buying. This is called a “market value election.”

Advantage: You won’t pay any additional stamp duty when you staircase (buy more shares) in the future.

Disadvantage: You pay more stamp duty upfront.

You pay stamp duty only on the share you’re purchasing plus the capitalised value of the rent (in practice, this usually means stamp duty on the share value only for most purchases).

Advantage: You pay less upfront — often nothing at all if the share value is below the threshold.

Disadvantage: You may need to pay stamp duty on future staircasing transactions when your total share exceeds 80%.

First-Time Buyer Relief for Shared Ownership

First-time buyers have significant stamp duty advantages:

No stamp duty on properties up to £300,000 (full market value) — this applies to the market value election
Reduced stamp duty on properties between £300,001 and £500,000
If using the phased approach, no stamp duty if your initial share is under £125,000 (the standard nil-rate band)

Which option is better for first-time buyers?

For most first-time buyers purchasing shared ownership on properties under £300,000:

Market value election — £0 stamp duty, and no stamp duty when staircasing
Phased payment — £0 stamp duty on initial purchase, but potentially stamp duty when staircasing past 80%

If the property is under £300,000, the market value election is almost always better because you lock in the zero rate and avoid future stamp duty when staircasing.

Stamp Duty When Staircasing

If you made a market value election

No further stamp duty is due on any staircasing transactions. You’ve already paid (or been relieved from) the duty on the full value.

If you used phased payment

No stamp duty on staircasing transactions that keep your total share at 80% or below
Once you staircase above 80%, stamp duty is calculated on the amount paid for that specific staircasing transaction
If you staircase directly to 100%, stamp duty is based on the full market value at that point (minus what you’ve already paid stamp duty on)

Stamp Duty Calculation Examples

Market value election:

Full market value: £250,000
First-time buyer relief: £0 (under £300,000 threshold)
Stamp duty: £0 ✅

Phased payment:

Share value: £62,500
Standard nil-rate band: £125,000
Stamp duty: £0 ✅

Both methods result in £0 stamp duty for this scenario.

Market value election:

Full market value: £400,000
First-time buyer relief rate: 5% on amount between £300,001–£500,000
Stamp duty: 5% × £100,000 = £5,000

Phased payment:

Share value: £100,000
Standard nil-rate band: £125,000
Stamp duty: £0 on initial purchase
But stamp duty may apply when staircasing above 80%

In this case, the phased approach saves money upfront, but you’ll face stamp duty later when staircasing.

How to Report Stamp Duty on Shared Ownership

Stamp duty must be reported and paid within 14 days of completion
Your solicitor handles the SDLT return — they should advise you on which option is better for your situation
You need to declare whether you’re making a market value election on the SDLT return

Frequently Asked Questions

Do first-time buyers pay stamp duty on shared ownership?

Most first-time buyers pay no stamp duty on shared ownership properties valued under £300,000 using the market value election. Even with the phased approach, stamp duty is usually £0 if the share value is under £125,000.

Should I choose market value election or phased payment?

For properties under £300,000, the market value election is usually better because it protects you from stamp duty when staircasing. For more expensive properties, the phased approach may save money upfront. Your solicitor can advise based on your specific situation.

Do I pay stamp duty when staircasing?

Only if you used the phased payment approach and are staircasing above 80% ownership. If you made a market value election, no further stamp duty is due.

Stamp duty is just one of several costs when buying shared ownership. See our full guide to buying costs, or use our calculator to estimate your total monthly payments.