SDLT treatment of garden land on disposal by a homeowner

This is a much discussed topic where clarification from HMRC has been sought on several occasions and the case of Hyman HMRC (2019) has also sought to provide clarify on this complicated area.

SDLT classifications

For SDLT purposes, land can be classed as ‘residential’; ‘non-residential’ and ‘mixed-use’.

Residential land is defined as “a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use, and land that is or forms part of the garden or grounds of a building (including any building or structure on such land)”.

Non-residential land is anything that isn’t residential and Mixed Use is land which comprises both residential and non-residential.

Why is the SDLT classification of land relevant?

This distinction between residential and non-residential land is important because there are different SDLT rates applicable to each type of land. 

If land is considered to the ‘residential’ then the buyer is potentially liable for a maximum SDLT rate of 15% on the “top slice” of the property’s value (including an additional 3% second home surcharge). This is in contrast to “mixed use” transactions (transactions that include non-residential aspects) where the buyer would pay a maximum rate of 5%.

For obvious reasons buyers are keen for land to be considered to be non-residential land whilst HMRC are keen for it to be residential land and over the course the last few years HMRC have now provided further guidance on what is considered to be residential land.

How is garden land treated for SDLT purposes?

– If buying a dwelling and its garden, the residential rates will apply and it’s likely the 3% surcharge will also be payable by the developer.

– If buying land from the ‘garden or grounds’ from the homeowner, but not the dwelling itself (i.e.- this is retained by the homeowner), the residential rates will apply, however there will NOT be any 3% surcharge if the dwelling is not also being purchased.

Please note: HMRC’s view is that if, at the completion date, there is no longer a building on the land (that is used or suitable for use as a dwelling, or in the process of being constructed or adapted for such use) for example – where the former dwelling is derelict and is otherwise uninhabitable or it has been demolished, then it will follow that the garden/grounds are no longer residential.

– In the past it has been considered that if the garden land is fenced prior to completion then it couldn’t be considered to be part of the ‘garden’ anymore and therefore would no longer be considered to be a residential transaction – however HMRC have made it clear that their view is that if garden/grounds are sold separately from the dwelling, the acquisition by the developer will be treated as residential irrespective of whether that part of the garden/grounds has been fenced/walled off or otherwise made physically inaccessible to the seller. This would apply where the developer purchases the garden land directly from the owner of the house.

Please note: On a subsequent transfer of such garden land it is likely that this would be considered to be non-residential because the garden land and the land upon which the dwelling are located would be in separate legal ownerships.

– In the context of ‘gardens or grounds’ HMRC interpret this very widely and have advised that they would take into account the status and former use of the land together with the layout of the land and outbuildings and the geographical distance between the land and the dwelling. However, they have emphasised that any hindrances on the land (rights of ways, access for statutory undertakers) will not prevent the land being “grounds”.

– In the case of Hyman v HMRC, it was confirmed that land which included a derelict barn, meadow and public bridleway where still considered to be part of the ‘grounds’ of the residential premises and therefore subject to the residential rates of SDLT.

– The First-Tier Tribunal (in the Hyman case) has also interpreted the term “grounds” widely and translated it to mean “land attached to or surrounding a house” which is “available to the owners to use as they wish” (irrespective of whether the land was actively used by the owners).

There are many other aspects of the transaction to consider which may also impact the SDLT position. For example, if there are multiple dwellings being purchased (i.e.- for a site assembly comprising various houses and gardens) then the developer could benefit from multiple dwelling relief which would result in the whole transaction being considered to be non-residential and therefore charged at the lower SDLT rates.

You will see that there is much to consider in relation to SDLT when garden land is being purchased and therefore if you require any advice on this or any other development matter, please contact Claire McSorley in our Real Estate department.

You can also email your query to or, call 01276 686222 or visit

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.


Claire McSorley
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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