The government has pledged that scores of tenants won’t have to start paying stamp duty due to changes in the Renters’ Rights Act.

Investigative financial group, Tax Policy Associates, had warned that tenancy reform could unintentionally force hundreds of thousands of renters to pay the tax.

SDLT is currently charged on some rents when their net present value exceeds £125,000, but as assured shorthold tenancies are likely to renew regularly, the value of the rent is calculated over a relatively short time. However, when tenancies become periodic, the net present value of rent under a continuing lease will be calculated assuming a lease that continues indefinitely. This means it could increase and exceed the £125,000 threshold.

According to the firm’s analysis, the average tenant in London would reach the £125,000 cut-off after six years, based on current rental prices. They would then be handed a £70 stamp duty bill.

After previously insisting that it was not an immediate problem, the government will now legislate in its Finance Bill 2026-27 “so that any residential lease which will be considered an assured tenancy under the Housing Act 1988, as amended by the RRA, will not give rise to a SDLT charge on the rent element,” according to exchequer secretary Dan Tomlinson.

The government will set out the detail by this year’s Budget, he explains. Legislation will apply retrospectively from the date on which existing tenancies become section 4A assured, on 1st May.

Collect

“HM Revenue and Customs will not collect any SDLT on the rent element of an assured tenancy from that date, until the date the legislation takes overriding effect,” adds Tomlinson.

“This measure ensures that tenants and landlords are not adversely affected by technical interactions between the RRA and SDLT legislation and reflects the government’s commitment to the smooth and fair implementation of reforms to the private rented sector.”

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