stamp duty confusion (40k and more than 21 years lease)

ss1591ss

Hi all


I have a share in a property which is less then 40k and it has a lease of more than 21 years and I am looking to purchase a 2nd property


the following is taken from SDLT_Higher_rates_for_additional_properties document from the HMRC website:


Chapter 3: Individual and joint purchasers buying a single dwelling
Individuals – purchase of single dwelling
3.1 The higher rates will apply to the purchase of a major interest in a single dwelling by
an individual, if at the end of the day of purchase Conditions A to D are met9:
● Condition A - the chargeable consideration is £40,000 or more;
● Condition B - the dwelling is not subject to a lease which has more than 21 years
to run on the date of purchase;
● Condition C - the purchaser owns a major interest in another dwelling which has
a market value of £40,000 or more and is not subject to a lease which has more
than 21 years to run at the date of purchase of the new dwelling; and
● Condition D - the dwelling being purchased is not replacing the purchaser’s only
or main residence.


I am confused about b/c where it says


● the dwelling is not subject to a lease which has more than 21 years to run on the date of purchase;


Could this not mean that if the dwelling does not have a lease of more than 21 years the higher rates apply?


Otherwise it would say this would it not?


● the dwelling is subject to a lease which has more than 21 years to run on the date of purchase;

by saying "is" instead of "is not" it makes it a lot clearer/understandable



does this mean I have to pay stamp duty or not?? please help

AdrianC

It's a booboo. Long leases ARE subject to the SDLT, short ones ARE NOT.

da_rule

It's not a misprint. By "subject to a lease" it means a property that has a lease granted out of it, so for example the freehold to a block of flats.

ss1591ss

da_rule wrote: »

It's not a misprint. By "subject to a lease" it means a property that has a lease granted out of it, so for example the freehold to a block of flats.

sorry i dont understand what you mean

da_rule

So, taking a block of flats. There will be a freehold title which will generally cover the ground the block sits on and communal areas and then each flag will have a leasehold title (usually a long lease). The leases are granted out of the freehold title. The freehold title is therefore subject to a lease (or more than one). If one of those leases has more than 21 years to run at the date of purchase the higher rate of stamp duty does not apply.

In most circumstances a leasehold property is not subject to a lease, it is a lease.

The guidance notes explain it quite well at page 8 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

ss1591ss

From page 10:

[FONT=&quot]3.13 If an individual is a joint owner of another dwelling then they may meet Condition C if the interest in land is a major interest not subject to a lease longer than 21 years and the interest that they hold is worth £40,000 or more. [/FONT]

so if subject to a lease means the leases are granted out of the freehold title, what does not subject to a lease mean? i thought leases can only be granted out of a freehold?

The property i have a share in is a house so how do i find out if the lease has been granted out of the freehold or not?

da_rule

Not subject to a lease means there is no lease granted. My house for example, I own the freehold, and I have not granted a lease to anyone over any part of the property. Therefore my property is not subject to a lease.

The freehold title for the block of flats down the road for example will be subject to a lease as all of the flats have been sold as leasehold properties.

If you currently have a leasehold house the question becomes what interest do you own. If it is just the freehold interest (assuming the lease is for more than 21 years) then the higher rate doesn't apply. If you own the leasehold interest or both the leasehold and freehold interest then they will apply (subject to the £40k minimum).

To find out, look at your title documents on the Land Registry. If there is a freehold title and a leasehold title for your house then you can purchase both of these for £3 each to check what exactly you own.

ss1591ss

ok thanks

just looked at for the property on hm land registry

its says

leasehold - Price Paid/Value Stated Data: Yes
freehold - Price Paid/Value Stated Data: No

does that give any indication or do i still need to purchase the title register for each?

da_rule

Ideally you need to purchase both just to check.

ss1591ss

ok i have got them, i am only on the Proprietorship Register for the leasehold document so does that mean i have to pay :-(?

da_rule

Yes it does.