Substantial savings through non-residential SDLT – Mehta

It’s fair to say most of these are negative, with the majority focusing on the residential market.

But commercial property developers, investors and landlords have a different mindset – they operate safe in the knowledge that their investments are the correct financial decision for today and for the future. This is why they get into the nitty gritty, and when they do, magic can happen.

In this cycle, there is one area that is gaining major traction – non-residential SDLT.

Non-residential SDLT explained

This is lifted directly from the Gov.uk website: “You pay SDLT on increasing portions of the property price when you pay £150,000 or more for non-residential or mixed (also known as ‘mixed use’) land or property.

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“A ‘mixed’ property is one that has both residential and non-residential elements; for example, a flat connected to a shop, doctor’s surgery or office.”

Big SDLT savings

The current SDLT rules were introduced on 1 April 2025.

Under current SDLT thresholds, a residential property purchased for £200,000 would incur an £11,500 payment, whereas a semi-commercial building would result in just a £1,000 fee.

The system is based on incremental percentages, so a residential property purchased for £500,000 would incur a £40,000 SDLT payment, whereas a semi-commercial building would result in just a £14,500 fee, a staggering difference of £25,500.

Permitted development

Once acquired, developers are using permitted development rights (PDR) to convert the commercial element into residential properties.

And the numbers are compelling, as SDLT savings can go a long way to – if not cover all – the associated costs of converting a semi-commercial asset into a fully residential offering, which can increase income streams and asset value.

Bridging solutions

The next Budget is set for Wednesday 26 November, and the fact remains that none of us truly know if or how SDLT fees will be altered.

This is where bridging finance comes into its own because of the speed at which finance can be acquired to secure the next investment property, and then to begin works.

We recently enhanced our lending criteria for semi-commercial properties to 75% loan to value (LTV) in a move designed to provide greater flexibility and higher lending potential for semi-commercial properties.

We also launched our first-ever Bridge To Term product, which is available for loans secured against residential and semi-commercial properties.

In short, we want to work with commercial property developers, investors and landlords who know this opportunity to save SDLT may be time-limited. Let us help you secure a positive outcome and keep as much money as possible in the pockets of property professionals.