The SDLT code distinguishes between “halls of residence for students in further or higher education” on the one hand and “residential accommodation for students, other than halls of residence for students in further or higher education” on the other. A third category exists for “residential accommodation for school pupils”.
The government considered representations carefully and has decided to create a new definition to ensure that purpose built student accommodation (PBSA) is not subject to the charge, bringing the first two categories together. Residential accommodation for school pupils will also remain, as a separate category outside the charge.
PBSA will be defined as property that is either:
a building that is purpose built (or converted) for use by students, consists of at least 15 bedrooms (which can be either standalone units or within ‘cluster flats’ or a mixture) and is occupied for more than 50 per cent of a tax year by students for the purpose of attending a course of study; or
accommodation that is excluded from registration under the Housing Act 2004 as a house in multiple occupation by virtue of being controlled or managed by a higher or further education establishment with the management being in conformity with an approved Code of Practice for the purpose of that exclusion.
Smaller establishments used as student accommodation, for example family houses that may have been converted or have rooms let out, will be within the scope of the extended CGT charge. The government does not believe that it is possible or fair to differentiate these properties from other homes or rental properties owned by non-residents.
Prospective investors interested in investing in UK student accommodation should contact us for advice.