Introduction Background Note
6.Financing a property purchase in a way that does not involve the payment of interest generally involves more than one Stamp Duty Land Tax (SDLT) charge. The alternative property finance reliefs ensure that buyers who finance property purchases using such alternative methods pay the same level of SDLT as those who use a conventional mortgage. Relief is only available where the financier is a financial institution as defined in the legislation. Broadly these are traditional financial institutions such as banks and building societies.
7.Home purchase plans were developed to provide a method of financing a home purchase which doesn’t involve the payment of interest and are regulated by the Financial Conduct Authority in a similar way to conventional mortgages.
8.The alternative property finance reliefs are currently only available for home purchase plans provided by a defined financial institution and a buyer who uses a plan provided by such an institution will be able to claim relief. However, a buyer will not be able to claim relief where their home purchase plan provider is not one of the defined financial institutions, even where the provider is authorised by the Financial Conduct Authority to provide home purchase plans.
9.These changes are being made to ensure that all buyers who use a home purchase plan, provided by an authorised provider, to finance their home purchase will pay the same level of SDLT as those who use a conventional mortgage. These changes will come into effect on and after the date on which Finance Act 2015 receives Royal Assent.