How is mixed-use property treated when you buy or sell?
Mixed-use property combines residential and commercial parts in one purchase, such as a shop with a flat above. Buyers pay Stamp Duty at non-residential rates, which top out at 5% with no surcharge, but HMRC applies the test strictly. Lending and VAT also follow commercial rules for the non-residential part.
Read more in our guide: Selling a problem property
Non-residential SDLT rates
| Portion of price | Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
| Higher rates surcharge | Does not apply |
| Example: £400,000 shop and flat | £9,500 SDLT |
What counts as mixed use
A property is mixed use when the purchase includes both dwellings and genuinely non-residential land or buildings: a shop, office, pub or workshop with flats, or a house with a substantial commercial unit. HMRC and the courts have rejected claims based on paddocks, large gardens or small parts of land with no real separate use, so the commercial element has to be real.
Stamp Duty
Mixed-use purchases use the non-residential rates. A £400,000 shop with a flat costs £9,500 in SDLT, against £30,000 for an investor buying a £400,000 house with the 5% surcharge. That makes good mixed-use stock attractive to investors. Purchases of six or more dwellings in one transaction can also elect non-residential rates; see Stamp Duty Land Tax.
VAT and lending
If the commercial part has been opted to tax, VAT applies to that share of the price unless the sale is a transfer of a going concern. The flats are always exempt. See VAT and property. Most mixed-use properties need commercial or semi-commercial lending, which is usually priced higher than buy-to-let.
Selling mixed-use property
Buyers value the commercial lease on its covenant strength and remaining term, and the flats on rent and condition. A long lease to a solid tenant helps price. Vacant shops or flats with only access through the shop can limit buyers. Check whether the flats are let on residential tenancies, which now fall under the Renters' Rights Act 2025, and the shop on a business lease.
Official Sources and Further Reading
- GOV.UK: Stamp Duty Land Tax: non-residential and mixed rates
- GOV.UK: land and property (VAT Notice 742)
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Mixed-use property combines residential and commercial parts in one purchase, such as a shop with a flat above. Buyers pay Stamp Duty at non-residential rates, which top out at 5% with no surcharge, but HMRC applies the test strictly. Lending and VAT also follow commercial rules for the non-residential part.
CGT is 18% or 24% for individuals on all property gains, so the split mainly matters for Stamp Duty and VAT rather than CGT.
Very rarely. A room used for work inside a dwelling is still part of the dwelling for SDLT.
Yes. Many investors buy mixed-use and residential stock together, though the purchase price is apportioned for tax.
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