Shared Ownership Stamp Duty Future Liability

Elizabeth*

Hi all - I wonder if you can advise on a question I'm struggling to find an answer for.

I'm purchasing a shared ownership property. The current owners own 40%, and it is currently valued at £540,000. The flat was new 2 years ago, and they purchased it from the housing association - to my knowledge this is their only transaction - no staircasing. I am attempting to buy 70%.

One of the solicitors I'm considering has sent this to me regarding eventual future staircasing to 100% - "We would need to investigate the duty the seller paid on the grant of the original lease so that we can advise on any future liability when staircasing above 80%".

Maybe a naive question but what does the original stamp duty has to do with me?
Assuming the current owners paid stamp duty on 40% (£200,000) 2 years ago on purchase (assuming an approximate total value £500,000 flat), what does this mean if I want to staircase from 70% to 100% in 2-3 years?

I can't find guidance on this anywhere - but at least two solicitors seem convinced there is something to investigate which could affect how much stamp duty I pay when i staircase to 100% - surely it is simply the difference between 70% and 100%? I can't understand what the previous owner's stamp duty has to do with my future staircasing?

If anyone has any insights please help! I'm now stressing about buying a flat that has bagage.... Thanks so much!

neilio

I bought a shared ownership flat (35%) just over six years ago. Three years ago I staircased to 100% and paid the stamp duty due. I sold the flat last October. I had a similar query come from my buyer's solicitor regarding me paying stamp duty. Same as you, I didn't understand what my stamp duty payment had to do with my buyer.

In the end, what I took away from this was, if the seller hadn't paid their stamp duty owed then their transaction could be voided which would mean the property could be repossessed, regardless of them having sold to you or not, which means you could get turfed out!

Does the solicitor you are speaking to have experience in conveying purchases of shared ownership properties?

Elizabeth*

Thanks so much!

Does the solicitor you are speaking to have experience in conveying purchases of shared ownership properties?

Yes, I'm only speaking to experienced people - who all seem to shirk actually answering the question specifically as I haven't appointed anyone yet.

Elizabeth*

Would love to get any others' views / experiences with this, as well as a solicitor's take if any are around?

sheramber

have a read of this

https://www.gov.uk/guidance/sdlt-shared-ownership-property

Elizabeth*

have a read of this

Thanks - I've read all of this but it all refers to your own transactions - not the tranactions of the owner before you and how this relates to what you pay.

It does say this:

The amount of SDLT due is based on the total amounts you’ve paid for the property so far. This is because the transactions count as linked transactions for SDLT.

This also means that in some cases you pay tax (or more tax) on the first grant of the lease.

This doesn’t include staircasing payments that don’t take your share of the property over 80%. But if the first grant of the lease took place on or after 12 March 2008, this transaction is excluded because it doesn’t count as linked with the rest of the transactions.

Elizabeth*

It's several solicitors actually - all of which are shared ownership recommendations from the housing association, and they claim shared ownership stamp duty is calculated as a linked transaction from the original purchase. (so they're linked by the peoperty rather than by the buyer - the connection all payments towards the property are towards one eventual 100% purchase - at least that's how I've grown to understand it).

Anyone been in this situation (purchased from someone else and then staircased to 100% having to factor in previous stamp duty paid to calculate what the fee should be)?

local legal experts - is there a way to check this with HMRC?