Stamp Duty Land Tax on overage

julie10_2

Hi I wonder if anyone can offer any advice?

My dad is selling a bungalow with a large garden, he tried to get planning permission for 3 bungalows at the back, was refused, went to appeal and refused again.

He had an offer on the bungalow and the land/garden in November last year with the provision of an overage on the land should it receive planning permission in the future.

The sale has been dragging on for ages and yesterday he received a letter from his solicitor saying -

"The overage complicates matters as a chartered surveyor will need to be instructed to estimate the future value of the land if it were to be developed. SDLT will then be charged on the total estimated value and purchase price in total. e.g. estimate future value £400,000 plus £245,000 would mean SDLT at 4% on £645,000. The buyer could apply for a deferred payment on the condition that he pay 4% on the initial purchase price of £245,000 i.e. £9,800"

The purchaser (apparently) isn't looking to develop the land and bearing in mind planning was refused for 3 bungalows, I can't see how the above could be relevant. Why should someone pay stamp duty at a higher rate if he doesn't plan to develop?

Has anyone ever come heard of this before? I've contacted HMRC and waiting for a call back, they did point me in the direction some of their legislation but the examples were more to do with developers than a situation like this.

Any thoughts/comments would be greatly appreciated.

Julie

Thrugelmir

julie10 wrote: »

The purchaser (apparently) isn't looking to develop the land and bearing in mind planning was refused for 3 bungalows, I can't see how the above could be relevant. Why should someone pay stamp duty at a higher rate if he doesn't plan to develop?

The vendor , your father, is imposing the overage condition in the contract I assume. So whether the purchaser has any intention or not of redeveloping is irrelevant.