Alternative property finance relief from LTT
Alternative property finance and LTT
Schedule 10 can prevent extra LTT where a qualifying finance provider sits between you and the property.
- It covers specified lease-and-transfer and sale-and-mortgage structures.
- Each condition and connected arrangement must be checked.
- The law in force on the transaction date needs confirmation.
Scroll down for the full analysis.
Read the original guidance here:
Alternative property finance relief from LTT
Alternative property finance relief can stop a finance provider’s role from creating extra Land Transaction Tax, or LTT: Wales’s stamp duty on property.
It does not remove tax from every step. It applies only where the funding plan meets detailed conditions.
What this rule is about
A normal mortgage lets you buy a home using a lender’s loan. Some finance plans work differently.
The provider may buy the property first. It may then lease it to you or sell it with a mortgage.
Without relief, those extra property steps could create more LTT than a normal mortgage purchase. Schedule 10 is designed to avoid that result in specified cases.
What the official source says
Welsh Revenue Authority guidance describes three forms of alternative property finance. The guidance explains the authority’s view. The legal tests are in Schedule 10 to the Land Transaction Tax Act.
- A finance provider buys the property, leases or sub-leases it to you, and gives you a right to require a later transfer.
- The provider and you can hold shares in the property as beneficial tenants in common.
- A provider buys the property. It then sells it to you and takes a legal mortgage over it.
- Earlier compliance governs later lease relief.
- For sale-and-mortgage arrangements, the provider must comply with the LTT rules for its own purchase.
What this means in practice
The key point is simple: the provider being in the middle should not, by itself, mean you pay LTT twice. But the paperwork must match the statutory model.
Not every lender qualifies. Schedule 10 uses a technical definition of “financial institution”, which includes specified regulated providers.
- Check that the funding provider meets the statutory definition.
- Keep the agreement that gives you the right to obtain the property later.
- Check whether the provider buys the whole interest or only a share.
- Check whether another tax relief is available on the provider’s first purchase.
How to analyse it
Start with the real transaction, not its marketing name. “Islamic finance”, “home purchase plan” or a similar label does not settle the question.
- Map each property transfer, lease and mortgage in date order.
- Identify which of the three Schedule 10 structures best fits the plan.
- Check that a qualifying financial institution is involved.
- For a lease plan, check that you have a right to require a transfer later.
- Check all connected arrangements, including any plan to change control of the provider.
Example
Maya uses a plan where a qualifying provider buys a home, grants her a lease, and agrees to transfer the home when she uses her right to buy it.
The provider’s original purchase may still have LTT consequences. If the required conditions are met, the lease and later transfer can receive relief.
The structure therefore does not create an extra LTT charge merely because the provider stood between Maya and the seller.
Why this can be difficult in practice
This is the part people get wrong: relief is not based only on the type of finance product. The documents create the relevant legal rights.
Each stage also matters.
- A promise to transfer later must meet the statutory test.
- A restriction on that right may affect the treatment of the provider’s interest.
- Other reliefs on the first transaction can block these reliefs, even if later withdrawn.
- Connected plans to transfer control of the provider can prevent relief for lease arrangements.
Key takeaways
- Alternative finance can qualify for LTT relief in Wales.
- The structure and documents matter more than the product name.
- Check the law in force on the date of the transaction.
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
- LTTA 2017 Schedule 10 para 1 — overview of alternative property finance reliefs
- LTTA 2017 Schedule 10 para 2 — relief for lease and eventual transfer arrangements
- LTTA 2017 Schedule 10 para 3 — relief for sale and mortgage arrangements
- LTTA 2017 Schedule 10 para 5 — other reliefs that prevent these reliefs applying
- LTTA 2017 Schedule 10 para 6 — control arrangements that block lease finance relief
- LTTA 2017 Schedule 10 para 8 — which finance providers can qualify
- LTTA 2017 Schedule 10 para 9 — broad meaning of finance arrangements
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority 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. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The result can depend on the full documents and on every connected step in the funding arrangement.
- The supplied statutory bundle does not state its currency date, so the law in force on the transaction date should be checked.
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.
- The finance agreement and any lease, sub-lease or mortgage.
- Documents showing the provider’s regulatory status and role.
- The purchase contract, transfer documents and any agreement for a later transfer.
- Details of connected arrangements and any other relief claimed for the first transaction.
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 Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION Alternative property finance relief from LTT [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 - LTTA 2017 Schedule 10 para 1 - overview of alternative property finance reliefs https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/1 - LTTA 2017 Schedule 10 para 2 - relief for lease and eventual transfer arrangements https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/2 - LTTA 2017 Schedule 10 para 3 - relief for sale and mortgage arrangements https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/3 - LTTA 2017 Schedule 10 para 5 - other reliefs that prevent these reliefs applying https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/5 - LTTA 2017 Schedule 10 para 6 - control arrangements that block lease finance relief https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/6 - LTTA 2017 Schedule 10 para 8 - which finance providers can qualify https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/8 - LTTA 2017 Schedule 10 para 9 - broad meaning of finance arrangements https://www.legislation.gov.uk/anaw/2017/1/schedule/10/paragraph/9 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/land-transaction-tax-alternative-property-finance-reliefs-technical-guidance#5748 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority 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 - The result can depend on the full documents and on every connected step in the funding arrangement. - The supplied statutory bundle does not state its currency date, so the law in force on the transaction date should be checked. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 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 3 September 2026
Useful article? You may find it helpful to read the original guidance here: Alternative property finance relief from LTT
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