Stamp duty on off-plan property

Jobbyjob

I've reserved a flat in a new build development that is scheduled to be completed next Summer. I haven't exchanged yet, but that would be due to take place towards the end of October. I'm aware that the stamp duty wouldn't be payable until completion, but, as I understand it, the details of it would be sorted out at exchange.

I was wondering though, if a reduction in stamp duty was announced in the Autumn statement, or next year's budget even (i.e. before completion), does anyone know what stamp duty would be ultimately payable? Obviously this is hypothetical, and I'm not presuming such a change will happen; just that it conceivably might. It would just be rather annoying to have to pay the higher rate if a lower one applies at the time of purchase (or even, if a stamp duty holiday was announced for first-time buyers like me, none at all, though admittedly that may be wishful thinking!)

Thanks!

G_M

SDLT is due within 30 days of Completion, based on the amount paid.

If you Complete next summer, the rates applicable next summer will apply.

the details of it would be sorted out at exchange.

No idea what you mean by this.......

Jobbyjob

Thanks for that. What I was trying to say there was that I thought the SDLT to pay would be confirmed at exchange (though not payable until completion) and so could be 'locked in' as it were, even if the rate did change between then and completion. Happy to be corrected on this though, if that is not the case.

booksurr

technically speaking stamp duty land tax becomes due at the exact moment in time that the transaction has been "substantially performed" and the contract is "unconditional" - this is called "the effective date"

in simple terms performance means the exact point in time that "chargeable consideration" has been given (you paid the money) and received (they gave you the property). AKA ... the completion date.

however, as you rightly query, an unconditional contract can be created at the point of exchange if there are indeed no conditions attached to the performance of the contract - so the question is ... are there?

https://www.gov.uk/guidance/stamp-duty-land-tax-online-returns

The effective date
The effective date is usually the date the transfer is completed. But it can be the date the contract is ‘substantially performed’ if this is before completion. ‘Substantial performance’ is when one of the following happens:

- most of the buying price is paid - normally 90% and payment can be in cash or something else of economic value
- the buyer is entitled to possession of the property

Thrugelmir

Stamp duty is payable at the applicable rate at completion.

Jobbyjob

booksurr wrote: »

however, as you rightly query, an unconditional contract can be created at the point of exchange if there are indeed no conditions attached to the performance of the contract - so the question is ... are there?

Very interesting - thanks for that. I'm not sure about the conditional or unconditional nature of the contract, but I'm only just about to get the ball rolling with solicitors and such, so I'll be sure to ask them about that!

davidmcn

Not sure why everyone is missing the point here - generally speaking when there is a change in stamp duty there are transitional arrangements so (if you concluded a contract before the Budget) you can opt to pay at the rate which applied when you exchanged. There are however no guarantees that such a concession will always apply.

kingstreet

In last year's SDLT change, any newbuilds which had exchanged contracts on or before 25 November 2015 got to use the old rules, so this may happen again if you exchange contracts before the Autumn Statement.

Not expecting any further changes this year, are we?

Jobbyjob

Probably not, but there's a chance. I've seen a few calls for changes to stamp duty recently from a number of groups (though I'm sure that's always the case, but I haven't been looking until recently). And what with it being a new government, and the first post-referendum opportunity to re-jig things to boost the market, you never know.