Savanna Hoffman
The short answer is: it depends. Students who are looking to purchase a property may be subject to Stamp Duty Land Tax (SDLT) depending on the type of property and the number of dwellings they are buying. Purpose-built student accommodation, such as halls of residence, is typically exempt from Stamp Duty, whereas other types of student accommodation may be subject to SDLT but with potential relief available. Students who are renting accommodation do not pay Stamp Duty, but their landlords may be subject to SDLT depending on the specific circumstances.
Calculating and paying Stamp Duty can be a complex process, and it is always recommended to seek professional advice to ensure compliance with the applicable laws and regulations.
Do students pay stamp duty?
| Characteristics | Values |
|---|---|
| Purpose-built student accommodation | Exempt from stamp duty land tax payments |
| Residential threshold | £125,000 |
| Student halls of residence | Considered non-residential property, so multiple dwelling relief is unavailable |
| First-time buyers | Exempt from stamp duty on the first £300,000 of a main residential property (provided the property costs £500,000 or less) |
| Non-resident status | Applicable if the buyer does not spend at least 183 days in the UK in the 12 months before purchasing the property |
| Deadline for payment | No later than 30 days after the documents have been dated and signed |
| Payment methods | Electronic payment (Faster Payment, Bacs, CHAPS) |
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What You'll Learn
Purpose-built student accommodation
The demand for PBSA is increasing due to the rising number of international and domestic students pursuing higher education in the UK. In 2021, the UK government announced plans to grow international student numbers to at least 600,000 by 2030, with an additional 400,000 students expected to begin their studies at UK universities by then. This has resulted in a profitable market for PBSA, with the sector reaching a combined value of over £72 billion by the end of 2022.
PBSA is particularly attractive to students as it often includes rent, council tax, WiFi, and leisure facilities in one monthly fee. For investors, PBSA can provide a reliable source of rental income and a constant, regular income.
When purchasing a PBSA property, it is typically exempt from stamp duty land tax (SDLT) payments. However, if the buyer purchases more than one PBSA property together, and the aggregate price exceeds £125,000, then SDLT would be payable. To qualify for multiple dwellings relief (MDR), the property must consist of three or more self-contained units that are let to students under separate tenancy agreements. MDR is not available for traditional halls of residence, which are classified as non-residential properties.
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Halls of Residence
Student accommodation takes many different forms, and whether or not a building is defined as a "hall of residence" will depend on the type of accommodation it offers. Student halls of residence are owned by the educational institutions that they serve and are usually located on or near the institutions' campuses. Only students who are attending the institution can reside in the building, and the institution has control over who lives there.
To qualify as a hall of residence, HMRC requires proof that only students or staff reside in the building and that the institution has control over who lives there. There must also be a degree of privacy between each dwelling, with separate access to basic utilities and individual letterboxes or postboxes.
Purpose-built student accommodation differs from halls of residence in that it is restricted to use by students but is not owned by or affiliated with any particular educational institution. This type of accommodation is subject to the residential rates of SDLT but not HRAD, and MDR may apply.
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Student property investments
Investing in student housing properties has its pros and cons. The student housing market is full of inexperienced renters, who may be unaware of the importance of the terms outlined in the lease, which could lead to breaches in the rental agreement. Students may also be unaware of landlords' rights and may have poor money management skills. Students may also cause more damage to units, due to college parties and other social events.
However, the student housing market is also stable, with a steady flow of tenants, which leads to consistent lease renewals. Students may enrol in a two-year associate's or a four-year bachelor's degree programme and live in the same rental location for that time. If a student enrols in graduate school at the same university, they may renew their lease for even longer. Student housing has proven to be very resilient in times of economic recession. From 2008 to 2010, publicly traded student housing real estate investment trusts (REITs) increased same-store NOI by 8.7%, whereas publicly traded conventional apartment REITs same-store NOI decreased by 6.3%. Investors in student housing can also focus on smaller maintenance needs rather than budgeting for expensive refurbishing projects or home improvements.
When it comes to student accommodation, there are two types of properties to consider:
- Halls of Residence: These are owned by the educational institution that the residing students attend. Only students or staff of the institution can live in this type of property.
- Residential Accommodation: This type of student accommodation is not affiliated with any educational institution. It is often owned by a specialist property company that targets the student market. All residents must be students, but they don't have to attend the same institution.
For investors, student housing properties present a unique set of considerations. Students typically prioritise affordability, privacy, and space over new fixtures and high-quality flooring. Investors can, therefore, focus on providing clean and functional spaces without investing in the highest-quality materials. Maintaining the property's condition is essential for attracting new tenants, but students' expectations may not be as high as those of a family or young professional.
Overall, investing in student housing can be a stable and resilient opportunity, particularly with increasing enrolment rates at universities. However, investors should be aware of the potential challenges posed by inexperienced renters and the need to maintain units to meet students' needs and expectations.
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First-time buyer status
When you're buying a property, you'll likely need to pay Stamp Duty Land Tax, a tax on your purchase. However, first-time buyers benefit from Stamp Duty relief, which reduces the upfront costs for first-time buyers. This relief was announced in the Autumn Budget of 2017 and took effect on 22 November 2017.
First-time buyers don't pay Stamp Duty on the first £300,000 of a main residential property, as long as the property costs £500,000 or less. If the property is worth more than £500,000, you'll pay the standard Stamp Duty rates. You only pay tax on the amount above the threshold. For example, if you buy a home for £304,000 as a first-time buyer, you'll pay 5% tax on the £4,000 above the £300,000 threshold.
The Stamp Duty threshold for first-time buyers was previously £500,000, but it decreased to £125,000 on 1 April 2025. This change means that first-time buyers will pay more Stamp Duty. The new threshold applies to both standard Stamp Duty rates and the relief rates for first-time buyers.
To qualify for Stamp Duty discounts as a first-time buyer, you must meet certain criteria. Relief is only available if you've never owned or inherited a foreign property. Additionally, if you're buying a home with another person, everyone included in the application must be classed as a first-time buyer to benefit from the relief scheme. If you don't meet these criteria, you'll generally face a 2% surcharge on your Stamp Duty rate.
It's important to note that Stamp Duty rates and thresholds can vary depending on the region. For example, first-time buyers in Scotland don't pay Stamp Duty (known as Land and Buildings Transaction Tax) on property purchases up to £175,000. In Wales, while there's no equivalent scheme, no one pays Stamp Duty (known as Land Transaction Tax) on property purchases up to £225,000. These regional variations should be considered when purchasing a property as a first-time buyer.
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Non-resident status
The non-resident status for stamp duty applies to those who do not spend at least 183 days in the UK (including Scotland and Wales) in the 12 months before purchasing a property. In this case, the non-resident rate of Stamp Duty is equivalent to an extra 2% on standard rates. For example, a non-resident first-time buyer purchasing a property for £500,000 would pay 2% Stamp Duty on the first £300,000 and 7% Stamp Duty on the remaining £200,000.
The rules for non-resident status are more complex for married individuals. Additionally, the test for determining non-resident status does not consider nationality, citizenship, or residence status under the UK Statutory Residence Test. Instead, the 'effective date of the transaction' is used, which is typically the date the transaction is completed or the date of substantial performance of the contract if it differs.
For trusts, the residence status of the trustees and beneficiaries may be considered to determine whether the purchase is subject to the surcharge. If any trustee is a non-UK resident, the trust is generally treated as non-UK resident. However, if a beneficiary is entitled to remain in the property for life or receive income from the property, their residence status takes precedence.
Similar rules apply to collective investment schemes, where the residence status of the person taking out the finance is considered for financial institutions involved in alternative property finance schemes. Overall, the rules for non-resident status and the associated stamp duty surcharge aim to capture overseas purchasers and foreign nationals buying property in the UK.
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Frequently asked questions
Students do not need to pay stamp duty if they are living in purpose-built student accommodation. This type of accommodation is limited to students and is owned by the educational institution. If the student accommodation is not purpose-built, then students may need to pay stamp duty if they are named on the tenancy agreement.
Purpose-built student accommodation is a type of student accommodation that is intended for use by students alone. This type of accommodation usually features a large number of grouped flats where all amenities are shared along with living areas.
Stamp duty is a tax that is usually applied to property purchases. The rate of stamp duty that is charged depends on the type of property and whether it is the buyer's first property.
