Commonhold registration and stamp duty land tax
Commonhold and SDLT
Commonhold registration can create SDLT land transactions, even where there is no ordinary sale. Most registrations will be exempt because no payment is made.
- Units and common parts are considered separately.
- A consent payment is not, in HMRC’s view, payment for the registration.
- A connected company can trigger a market-value rule.
Scroll down for the full analysis.
Read the original guidance here:
Commonhold registration and stamp duty land tax
Changing a block into commonhold can create land transactions for stamp duty land tax, even when nobody buys a flat in the usual way. Where the parties give no money or other value for the new rights, as will usually be the case when a block changes to commonhold, no SDLT is due. That is usually decisive.
What this rule is about
Commonhold provides a way of owning flats without the usual long leases. Each flat owner holds the freehold of their own unit. A commonhold association owns and manages shared areas, such as stairs, halls and lobbies.
This can happen when an existing block changes to commonhold. It can also happen before a developer sells any units in a new block.
Land Registry registration steps matter because the law itself can give people rights over land, and SDLT can apply in that situation rather than only on an ordinary purchase or transfer. The route does not remove the issue.
That sounds surprising. It matters because a conversion may involve several new land rights at once.
What the official source says
HMRC’s manual says that registering a unit for its holder, and registering the common parts for the commonhold association, are land transactions.
HMRC says this is because each registration, whether for a unit holder or the association, gives someone a taxable interest in land by operation of law. The registration creates that interest.
- A unit holder receives the freehold of their own unit.
- The commonhold association receives the freehold of the shared parts.
- These registrations will generally involve no amount paid for the land.
- Where nothing is paid, the transaction is normally exempt from SDLT.
- A different rule may apply if the association is a company connected with the transferor.
- In that case, HMRC treats the SDLT amount paid as no less than market value.
- HMRC accepts that the common parts will usually have negligible market value.
- HMRC gives that view because the association cannot trade in or profit from those parts.
That last point is important. It is HMRC’s published view, not a special exemption written into the SDLT legislation.
Before any units have been sold, HMRC does not treat registering land as commonhold as a land transaction, and it takes the same view of ending that status before a first unit sale. Neither is treated as one.
What this means in practice
Most commonhold conversion steps should not produce SDLT simply because a new Land Registry entry is made. The question is not just whether land has changed hands.
You must also ask what, if anything, each party gave in return.
HMRC says that a payment made to secure consent to the conversion, even when every unit holder and any landlord must agree, is not payment for the land registration. It is separate.
- Do not assume a new freehold title means SDLT is due.
- Record what each party receives through the registration.
- Separate a consent payment from a payment for a land right.
- Check whether the commonhold association is a company.
- Check whether the transferor is connected with that company.
- Keep records showing why no payment was made for the registration.
- Consider the common parts separately from the individual units.
The ending of an old lease might look like an exchange of that lease for the new freehold. HMRC’s manual says otherwise.
The lease ends by operation of law when the unit is registered, so its ending is not payment for that registration.
How to analyse it
Start with the legal steps, not the label “commonhold conversion”. A single project may create several rights and registrations. Each one needs its own short review.
- Is this an existing block converting to commonhold, or a new development?
- Has a unit been registered for a unit holder?
- Have the common parts been registered for the association?
- What right over land did each person or body receive?
- Did anyone give money, property, debt relief or something else in return?
- Was money paid only to obtain consent for the conversion?
- Is the association a company or other body corporate?
- Is that body connected with the person transferring the common parts?
- If so, what was the market value at the relevant time?
- Does the evidence show why the shared parts have little or no value?
After reviewing the particular registration and what was given for it, the no-consideration exemption is the key rule if no amount was paid.
Check the connected-company rule too. If the connected-company rule applies, do not stop there. That rule can replace a nil figure with market value.
Example
Amira owns the freehold of a small block. The flat owners and Amira agree to convert it to commonhold. Each flat owner becomes the freehold owner of their own unit, while the commonhold association takes the shared hall, stairs and roof.
No one pays for those new registrations. One flat owner pays £500 for Amira’s consent to the conversion. On HMRC’s view, the £500 is not payment for the land registration, so it does not change the SDLT result for that step.
Now change one fact. Suppose Amira controls the company that becomes the commonhold association. The connected-company rule may then require a market-value figure for the common parts.
Although HMRC normally regards this figure as negligible, the documents and facts still need checking.
Why this can be difficult in practice
The tax result often turns on details that look like conveyancing paperwork, especially where payments, ownership before registration, and control of the association must all be identified. Who owned what before registration? What exactly did each payment buy? Who controls the association?
No cash is not conclusive. A connected company can bring the market-value rule into play.
- A payment may have more than one purpose.
- Control of a company can be less obvious than share ownership.
- Shared areas may include land with unusual value or development potential.
- Registration without unit holders has a different treatment from a conversion.
- The old lease ending does not itself count as payment, on HMRC’s view.
- HMRC manuals explain HMRC’s approach; they are not the law itself.
The official manual also says commonhold applies only in England and Wales. SDLT applies to land in England and Northern Ireland, but Welsh land transactions now fall under Welsh land tax rules instead.
For that reason, this SDLT guidance is mainly relevant to commonhold arrangements in England.
Key takeaways
- Commonhold registration can create SDLT land transactions.
- No SDLT will usually arise where nothing is paid.
- Connected commonhold companies need a market-value check.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 42 — the basic charge to stamp duty land tax
- FA 2003 section 43 — when obtaining land rights is a land transaction
- FA 2003 section 48 — which land rights can be taxed
- FA 2003 section 53 — market-value rule for connected company transfers
- FA 2003 Schedule 3 para 1 — exemption where nothing is paid for land
- an Act of 2010 we do not have an identifier for section 112 — when people and companies are connected (no link: an Act of 2010 we do not have an identifier for)
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- Whether parties are connected can require a detailed review of ownership and control.
- HMRC accepts that common parts normally have negligible market value, but the value remains a fact question if the connected-company rule applies.
- The supplied statutory material is current only to 17 November 2025. A transaction after that date needs a current-law check.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- Land Registry entries and the commonhold registration documents
- Details of each unit and the common parts
- Any payment made as part of the conversion
- The parties’ ownership and control structure
- A valuation if the connected-company rule may apply
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Commonhold registration and stamp duty land tax [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 42 - the basic charge to stamp duty land tax https://www.legislation.gov.uk/ukpga/2003/14/section/42/2025-11-17 - FA 2003 section 43 - when obtaining land rights is a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 48 - which land rights can be taxed https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - FA 2003 section 53 - market-value rule for connected company transfers https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 Schedule 3 para 1 - exemption where nothing is paid for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/1/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - when people and companies are connected Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00285 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether parties are connected can require a detailed review of ownership and control. - HMRC accepts that common parts normally have negligible market value, but the value remains a fact question if the connected-company rule applies. - The supplied statutory material is current only to 17 November 2025. A transaction after that date needs a current-law check. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Commonhold registration and stamp duty land tax
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