A legal loophole means that if forest or woodland is purchased with residential property, there will be less stamp duty charged than normal on the property, the Telegraph reported in September 2017.
Lawyers have argued that buying a parcel of land at the same time as a house means that the transaction is regarded as “mixed use”. This is true even if the woodland and the house are in different locations. The stamp duty on second homes is 3%, which is more than that on mixed property.
So far, this strategy has not been tested in court, but the Telegraph reported that many wealthy homebuyers are avoiding stamp duty by buying trees and houses at the same time.
If a house is a second home or bought as a buy-to-let investment, the stamp duty is 3%. On expensive houses, this can be costly; for example, the stamp duty on a second home worth £1m is £73,750. For the same property classed as for mixed use, the buyer would pay £39,500. A small plot of woodland can be bought for between £1,000 and £5,000.
Before people rush to buy small bits of woodlands and pay lower stamp duty, HMRC could very well decide that this strategy has dubious legality, and may charge the extra stamp duty. The mortgage lender could say that, because it is a mixed use transaction, only a commercial mortgage is available, and this could cost more in interest than a standard mortgage.