LBTT4012 - Non-Residential transactions

Non-residential property means any property that is not residential property. See LBTT4010 for the meaning of residential property.

Property in a land transaction is non-residential if:

• the main subject-matter of the transaction consists of or includes an interest in land that is non-residential property or
• the transaction is one of a number of linked transactions and the main subject-matter of any of these transactions consists of or includes an interest in land that is non-residential property

The LBTT(S)A 2013 specifically defines the following buildings, or part of a building, as not used as a dwelling and therefore non-residential:

• a home or other institution providing residential accommodation for children (a care inspectorate registration or similar would be expected to be held for this)
• a hall of residence for students in further or higher education (specifically halls of residence and not merely accommodation for students)
• a home or other institution for persons in need of personal care due to old age, disability, drug or alcohol dependency or mental health conditions (a care inspectorate or other relevant registration / licence would be expected to be in place for these types of homes / institutions)
• a hospital or hospice
• a prison or similar establishment
• a hotel or inn or similar establishment (business documentation including any relevant licences would be expected to be held showing the business purpose / commercial use)

Where a building is used for one of these purposes, no account is to be taken of its suitability for any other use for the purposes of defining residential property at Section 59(1)(a).

Non-residential property may also include:

• commercial property, for example shops or offices
• property that isn’t suitable to be lived in e.g. uninhabitable dwellings (please see further guidance at situation at the effective date)
• agricultural land that’s part of a working farm
• a registered croft.

Evidence should be kept to show that the land and/or buildings purchased satisfy the legislation and guidance to be considered non-residential and each case will be considered by Revenue Scotland on its own facts. For example, where a building is being used at the effective date as an office, it is likely Non-Domestic Rates (NDR) are being paid and the building is permitted to be used as an office.

Undeveloped land

Undeveloped land is essentially non-residential but may be residential property if, at the effective date, a residential building is being built on it. See LBTT4010 for the meaning of ‘Constructed or Adapted for Use’.

6 or more dwellings

Where 6 or more separate dwellings form a single purchase transaction or a grant of a lease over them, the whole transaction is treated as non-residential. However, multiple dwellings relief (MDR) can be applied to the transaction.

Where a property may be considered unsuitable for use as a dwelling

A property may not be treated as a dwelling for tax purposes if it has deteriorated to such an extent that the works would be too dangerous or hazardous to prejudice their viability. 

In the Court of Appeal decision Mudan v HMRC [2025], they endorsed the Upper Tribunal's analysis of "suitable for use as a dwelling" in the same case.  The Upper Tribunal's decision is Mudan v HMRC [2024] UKUT.  At paragraph 58(4)  the Upper Tribunal said  "(4)  An assessment should be made of whether the defects in the building which require works are capable of remedy (in colloquial terms, are fixable). That assessment should take into account whether the works would be so dangerous or hazardous as to prejudice their viability.... [The assessment] should also take into account whether the works could be carried out without prejudicing the structural integrity of the building (because, for instance, the walls might collapse)."  If the work is not feasible, or if carrying it out would compromise the building’s structure, the building is unlikely to be suitable for use as a dwelling.

In assessing this, the following questions should be considered: 

1. Has the property suffered severe structural damage or is it affected by hazardous conditions 
2. Is the property unsafe to repair, such that normal repairs cannot be carried out 
3. Is mandatory demolition and complete rebuilding the only option 

A hall of residence for students in further or higher education

These will ordinarily be buildings owned and managed by the educational establishments that the students residing in the building attend. These will be traditional ‘halls’ buildings that often sit on the campus of the educational establishment, or close to it, and students can only live in the building if they attend the educational establishment in question.

Residential accommodation for students other than student halls of residence, such as the type of properties owned by companies that specialise in the provision of student accommodation, are, while aimed at the student market, not owned by, or involved with, the educational establishments that the students in these buildings attend. There will still be an obligation for all residents to be students, however, these properties are subject to the residential rates.

Any other residential accommodation which happens to be let to or otherwise used by students but is not a hall of residence will be subject to residential rates.

Example calculation

Leases

LBTT may apply to anyone leasing non-residential land or property in Scotland.

The LBTT due on non-residential leases depends on the amount of rent being paid under the lease and other chargeable consideration, such as lease premiums.

For further guidance see:

LBTT6001 - Leases
LBTT60032 – Consideration other than Rent
LBTT6007 - Three yearly review of the tax chargeable

Example calculations