From 19/7/2011 a new stamp duty relief has been introduced relating to multiple purchases.
Under the old regime the rate of residential SDLT was calculated by the cumulative consideration paid on a transaction with reference a scale running from 0% for transactions below £125,000 to 5% for transactions over 1,000,000. Consequently, the SDLT percentage would be calculated on the value of the transaction as a whole, regardless of the number of properties.
The law has changed so that the SDLT rate is calculated with reference to the average price of the properties purchased.
To illustrate, under the old regime, if a purchaser bought 4 properties in a linked transaction each worth £300,000 SDLT would be £60,000 being 5% of £1,200,000.
Under the new regime SDLT would be payable on the average price of the properties, in this example the average price is £300,000 which falls into the 3% SDLT bracket, giving a total figure of £36,000, £9,000 for each property).
Conditions for the relief to apply:
The relief is available if, upon completion, the property comprises of multiple dwellings. Whether the dwellings need to be self contained is unclear.
If the relief is claimed, the rate of SDLT cannot fall below 1%.
The relief cannot be claimed for dwellings that are subject to a lease or sublease granted for an initial term of more than 21 years.
The relief is subject to clawback provisions if certain events occur within three years. One such provision is the conversion of the dwellings into fewer units.
The relief must be claimed in a land transaction return.
For further information, please contact:
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